Paper for life
The relationships between inflation, interest rates, foreclosures, the Fed, banks, and the general economy can be explained better in terms of hours of human labor than it can in terms of dollars.
A mortgage is a promise to work much more than it is a promise to pay money. A mortgage is technically written in terms of money, but the reality is that money represents work. The goal is for the lender to extract real work from the borrower, though perhaps in a roundabout means. The only real consideration in lending is that the borrower not be allowed to escape the promised servitude.
The housing bubble, however, consisted of promises to pay more hours of human work than could possibly exist. There are simply not enough people and not enough hours in the day to pay back such massive mortgage debt. The strawberry picker at $7/hour would have to work for about 71 years to pay back the principal on the apocryphal million dollar mortgage, and that ignores the interest, taxes, etc. It’s just not going to happen. They money is not going to be paid back.
Beyond the breaking point, when a borrower has nothing to look forward to but a life of servitude, there is no longer any motivation to pay back at all, because it cannot possibly make the situation any better. And there is a motivation to borrow yet more, because it cannot hurt. Two death sentences are no worse than one.
The Fed’s goal, when it forcibly transfers money from savers to borrowers by lowering interest rates, is to bring borrowers back to the brink of bankruptcy from well beyond that brink. When people are afraid of becoming bankrupt, they can be forced to work. When they’re already lost, there is nothing to be afraid of.




Le acciaierie cinesi hanno comprato tutta la produzione estrattiva per un anno di Rio Tinto (che oltre all’acciaio estrae l’80% dell’oro del mondo ed è proprietaria della più grande miniera d’oro al mondo, in Indonesia, nonchè primo contribuente dell’Indonesia e appartenente alla Investment Bank Rothshild-London-Branch) DI IRON ORE (acciaio) facendo balzare i prezzi del 96%. BHP Billinton, che ha recentemente fallito una scalata a Rio Tinto, punta al rilancio e tenta di vendere il suo acciao a prezzi ancora più alti.


