we're not trying to combat inflation they were trying to keep our entire banking system from going under.
Ok so...
In 1977 carter passed a law called the civil reinforcement act that stated that lenders had to lend to minorities, low income familiies and immigrants. The law was allegedly to stop discrimination.
This was SUPPOSED to make mortgages affordable to EVERYONE. A nice idea but the poor are poor for a reason and not speaking enlgish, poor budgetting, illegal immigraion, and no education are usually the reason for bad credit not neccessarily descrimintation.
So was it just a stupid hopefull idea or were the people sold on an idea that was intended to break the system? Did the richest most buisness savy politicians and buisnessmen in the world know that the baby boomers were retiring and wanted to intercept over 70 trillion dollars in wealth before it was passed on to the next generation??? Maybe it was about power, breaking you buying your assets for 10% on the dollar and imposing laws that make them own you?
OR he really cared about poor people.
Later.... clinton added to the law in a way that made it illegal to turn down high risk redline mortgages. Mortgage agencies were, by law, forced to give mortgages to people who by other intelligent monetary lending standards would NOT be given a mortgage. With governmental control over fannie mae the people were forced by law to fund bad mortgages and "take the hit". This has succeded in breaking the middle class in american by the poor dealings of politicians and uneducated hopes of the lower class.
The banks backed these loans by selling them to local and overseas investors giving high rate of returns on the medium quality high risk mortgages and then paying themselves a nice rate of return on the good low risk mortgages.
They sold these with a guarantee since, due to inflation, mortgages always go up in value. Uneducated investors jumped at the bit and as a result years later have lost their shirts. This drug down chinese, norweign, canadian, local investors.... when they loose their hard earned money to a criminal, irresposible lending system. Global implications.
It was known in adavace that fannie Mae (government entity) and freddy mac were in deep trouble since they had over 1 trillion dollars in high risk mortgages.
DO you know when you add thousands of people to a market???? Costs go UP. There are more people competing and raising demand on the houses and costs flew up.
An idea supposedly designed to make houses affordable for low income immigrant families now made housing unaffordable or overvalued to EVERYONE!!!
Then once the economy was hurtin they start taking money from the FED (at a high interest rate that american working class have to pay back) and buy FAILING buisnesses and hand over money to banks. This bailout bill was put together and tabled before a long weekend, with insufficient time to review, threats were made of martial law and there were no safeguards in place.
Money was given to banks allegedly so they can keep lending, without actually looking at their books, to even see if the case was valid to begin with.
There were provisions that stated that you cannot 1) go and see where the money went 2) criminally charge anyone receiveing money 3) ask for it back etc...
The allegedly failing banks got the money handed out huge bonuses to their execs and and at no point have they changed their lending habits to students and new families looking for a mortgage (the whole alleged reason for the bailout.)
Goldman sacs alone gave out something like 7B in bonuses.
When an economy starts to have inflation that only remedy is deflation but by propping up failing bad buisnesses it kept inflating. The process of delying a deflationary period worsens the deflation and caused the first great depression to increase in severity and duration. They burned up fields of cotton to try to increase the value of cotton and then they were poor with no clothes. They killed thousands and thousands of baby pigs to try to increase the price of pork and then the poor people went hungry....
You and your kids have to pay back the money to the FED with interest, you have to pay rich CEo bonuses, you have to pay to prop up failing buisnesses who are failing due to poor policies, drunken execs or old out of date machinery. You have to pay for people buying houses they cant afford and borrowing money they can pay back.
You have to pay for the banks selling high risk mortgages as a good investment and it being rated as a AAA investment.
You have to lose your job (some people) and suffer in a long drawn out period of suffering that was created and perpetuated by greed and stupidity.
There would have been some natural deflation as part of the normal free market where the people determine costs and create supply and demand. Now there is a big mess and the connected rich get rich and the rest get poorer.
Did you know the Federal reserve is a privately owned, privately traded entity. THe federal governemnt has ZERO control over the FED. It operates independantly of the governement and acts of the interest of private rich world bankers.
AMERICANS owe the bankers interest on a loan to give money to the bankers!!!!!
