Friday, September 7, 2012

Baby Boomers Savings Decimated Making Payments On Underwater Homes

The website You Walk Away posted some amazing information this week after studying the baby boomer portion of those that have walked away from their home (strategically defaulted after their home mortgage moved underwater). The first chart shows that 53% of those that walked away were in the 50 to 69 age bracket.


48% of the baby boomers polled depleted a good portion or all of their life savings before walking away. This number is so horrific I almost do not even want to think about it. It is terrible to think that people still feel there is something morally wrong from walking away from a loan owned by our current banking system.

People think that someone who owns a bank has worked hard to save those thousands of dollars that they had the decency to lend to them to make that home purchase. What they do not understand is that the money did not exist before the loan was made. Money is lent into existence under our current monetary structure. When someone signs for a loan or swipes their credit card, that money is created as a ledger on a balance sheet. Then that ledger begins collecting interest.

On some subconscious level I feel that people are moving closer and closer to understanding that our currency has no tangible value. Why do I think this? Because after depleting their savings to make payments to a bank, and thus destroying their life, 97% of those that finally walked away said they would recommend a family member walk away (except much sooner).


For those that need a primer on modern money mechanics, a topic discussed here numerous times that has hopefully changed the way most readers view the world (what they are working for, how to invest, etc.), the following video will provide a brief primer.

 

 For more on this subject and how it applies to where we are today see:

 Michael Maloney Discusses The Currency System

 Michael Maloney: Why Gold?

4 comments:

  1. Hey Tuna... what about playing the devaluation of mortgage...paying back the mortgage with monetary inflation ravaged dollars. Like the home I bought in 1971... over the decade made a great deal of personal wealth by letting inflation kill my debt ....
    Tricky Rick
    Boise

    ReplyDelete
  2. That's a great question and something I think about all the time with mortgage rates this low. The problem is that you need severe inflation close to hyper inflation, not just high inflation to make the numbers work.

    The reason is that mortgage rates will have to move up to reflect the underlying expected future loss in the paper bond. I understand that right now both the Fed and the government are holding rates down artificially, but that is like holding a beach ball under water. At some point the market is going to punish those rates severely in the other direction.

    There are already calls for Fannie and Freddie to further unwind their positions and the FHA is closing in on its first bailout, which will most likely cause them to have to restrict lending.

    It is a risk/reward ratio for me does not warrant the bet (although that could change moving forward).

    ReplyDelete
  3. Your thoughts on inflation taxes? IRS dunning us for inflated dollar amounts when actually, with falling value of dollar, we are paying the majority of taxes on blue sky... the IRS doesn't recognise inflation ... that'll kill most yields... what to do? If the markets don't steal our investments the IRS steals more from inflation taxes! baby boomers are screwed!!

    ReplyDelete
  4. Boomers have the numbers so I think in the future tax laws will be less punishing on them and focused more on sucking everything possible out of the younger Americans. They are the ones (the ones that don't leave the country) that will pay for the boomers and keep them happy heading to the voting booths.

    That is only when we get to the real world though. We still live in a world now where we have both low taxes and unlimited deficit spending so everyone wins.

    Where the boomers will get killed is social security tied to the CPI measuring inflation. CPI will continue to be modeled to underestimate the real rise in the cost of living. The poor will get much poorer.

    ReplyDelete