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What about inflation?

Discussion in 'Political Debate & Discussion' started by North Carolina Tentmaker, Sep 25, 2008.

  1. North Carolina Tentmaker

    Sep 19, 2003
    Likes Received:
    I think the government has to do something about the current crisis, and here is why, the current crisis is not a result of to little government but to much. The government came out and told these mortgage companies that they wanted them to make these loans to low-income/bad-credit borrowers. And to encourage that the government said they would insure these loans in case they went bad.

    I would love the more capitalistic approach of, “If banks made bad loans then they should loose money,” and, “If you borrowed more for your house than you could pay back you need to loose it.” But the truth is that these loans would have never been made without governmental interference to start with. It was our government who said they would insure the loans, and then Freddie and Fannie were set up to do that. We have to buy up the bad debt.

    Here is my biggest fear. How do you make money on a mortgage? Home mortgages have been the best investment most families ever make for 60 years and why is that? Because property generally appreciates. Whatever you borrowed for your home, it will be worth more than that when you sell it.

    Our government is going to buy up 700 billion dollars worth of bad debt. Debt that is guaranteed with equity tied up in real estate. The best way for the government to make money on this deal is if housing prices and inflation go up. We are setting ourselves up to a position where inflation will be good for our government.

    Now that scares me. :eek: