Replying to Avatar Toxic Bitcoiner

I tell normies that 70-95% of US mortgages are backed by the government and all I get is…silence. Why?

“You must be missing something. That can’t be true. If that were true, I’d know. It’d be all over the news. People would be up in arms. The government wouldn’t allow the government to do that.”

It would break their brains to accept that the main indicator of success in America, homeownership, is a government-sponsored fugazzi.

The Fed itself owns $2.3T of MBS. Good morning. nostr:note1sstxt02ndsrj7p4fu3tqguntgrkzfyhvx4smasndsj0jete5levqpnde5a
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to be decided 1y ago

What's the exact issue with this though?

It enables homeowners to continue to consume who otherwise wouldn't be able to, because their home is actually too expensive for them?

So it stimulates consumption based on borrowed money?

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Toxic Bitcoiner 1y ago

IIRC, as it stands, Freddie would also honor the rate of the 1st mortgage for the 2nd, which will in many cases likely be lower than the current market rate. Aka stimulus targeted to homeowners (boomers, the biggest voting block) at the expense of everyone else. Even absent that rate parity, it’s still State intervention in a market. The loans are backed by the State, which gives Fannie, Freddie, etc a perverse incentive to issue riskier loans. Much like student loans. Bubblicious.