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| 30 year mortgage rate when Democrats installed in Jan 20, 2021 was 2.77%. After sending hundreds of billions of dollars to Ukraine, it is now 6.78%. |
A 30-year mortgage payment of $2000/month in January 2021 morphed into a payment of almost $5000/month due to interest rates ballooning.
That explosion in interest rates is directly due to US involvement in Ukraine.
There are only so many dollars out there, looking to be invested. If the government is vacuuming them up, then Heather and Brett will have to bid higher (i.e. pay more interest) to get some of what is left-over after the biggest pigs feed from the trough.
"But the government can just print the money, right?"
There is a feedback loop on that, too. As the government conjures up money out of thin-air, it lowers the credit rating of the government just like too much credit-card debt lowers your Experian score. Borrowers demand higher interest rates to dilute the effect of anticipated inflation. Since you are also borrowing "dollars", the higher interest rate impacts your loans as well.
The party of Pelosi, Schumer, Biden and Kamala Harris OWN the war in Ukraine. They talk a good story about caring for Americans, but when it comes down to brass-tacks, they will support Ukraine over all of the 25-through-40 year-old Americans who want to buy their first home.
That age-group may find Trump's personality confrontational and repugnant. But at least you had a snowball's chance of owning your own home under "America First" policies.
On Target Joe, on Target.
ReplyDeleteGreat analysis, ERJ !!! I'll pass this on. ---ken
ReplyDeleteBEST
ReplyDeleteECONOMY
EVER
I share your views Joe but..... is it fair to pin the monetary policy disaster on Biden 100%? We had a lot of years of 'Free Money', absurdly low interest rates, far longer than was needed to spur the economy. So extreme that mortgages went below 2%, so extreme that oil briefly traded with a negative value. One extreme leads inevitably to the opposite. As Milton Friedman said, inflation is everytime and always the result of Washington making too much money available. - Aggie
ReplyDeletePossibly not, Aggie - at the same time, looking at the graph overlay there is a neat overlay in timing. At best, one could say that if it was not started by the current Resident, he/they have done nothing to fix the problem once it became readily apparent. For that, they are 100% responsible.
DeleteThe very existence of mortgages, especially the 30 year variety, artificially boosts demand which has driven property prices into the stratosphere. If we ever want affordable land, a return to biblical standards against usury is the way.
ReplyDeleteERJ, the campaign for the Red party should literally write itself. Eschew anything remotely controversial socially; it just gives sound bites. Simply, repeatedly, come back to statistics like this on the economy and foreign affairs and almost any other sort of affair over the last four years and ask yourself "Are you better off now than you were then? How will more of the same make you better off?"
ReplyDeletePlease explain the math, how interest went from 3% to 6% and the monthly bill went more than double.
ReplyDelete6.78% on average although you could just as easily say 7%.
DeleteI did not include escrow amounts.
The first payments on a 30 year are almost entirely interest with very little going to the principle.
I'm not deeply knowledgeable on all of the details behind this very complex subject, but I wonder:
ReplyDeleteHow much, if at all, should we support Ukraine? I've heard some analysis that posits "WW3" has already started, and one of the kicking-off points was the Obama administration allowing Rusia to take Crimea uncontested. Should this "mistake" (if you see it that way) be repeated?
I think your arguments about how interest rates are affected by government spending (which would be lower if we 'pulled out' of Ukraine) are sound - but I wonder to what magnitude the funding towards Ukraine actually affects the rates. Do we think that intersted rates would be substantially lower had Trump won in 2020?
Source for the argument that "WW3 has already started": https://youtu.be/gsCreKh-Y8A
My opinion is we shouldn't support Ukraine at all. Not one dime, not one bullet. We need a reverse Monroe Doctrine: we stay the hell out of European squabbles. They have been killing each other for millennia and won't stop. The ethnic hatreds go back generations.
DeleteNATO was a dead treaty the day after the USSR collapsed, we should have started closing bases and bringing our soldiers and equipment home the day after that.
Everybody has their own, pet theory. I don't present it as "Truth", it is just what seems most sensible to me.
DeleteTactics and Strategy are deeply influenced by topography and physical features. Mountains, swamps, bays with huge tides all create natural frontiers. Those frontiers are relatively easy to defend because the invaders are forced through known choke-points. Those choke-points work in the other power's favor if you try to invade them.
If you look at Central and Eastern Europe you will see cascades of choke-points. One a little east of Dresden with the Baltic on the north (300km), another at Krakow with the Baltic on the north (also 300km).
If Ukraine becomes part of NATO, should a conflict break-out, Russia is looking at a front that stretches from Riga, Latvia to Dnipro to Mariupol or 1400km in a straight line. But it will not be a straight line. It will zig and zag based on defensive features and political reliability of people on the ground.
Since this is a DEFENSIVE absurdity for both Russia and NATO, somebody is not playing a defensive game but is engaged in stealth offense.
Russia can make a solid case that since NATO is expanding, it is engaged in stealth offense and seeks to put Russia into a situation where it cannot defend itself with conventional means.
I am not saying Russia is pure and innocent. I am saying that based on German and French aggressions in the past that they are understandably paranoid.
It is my *personal* opinion that we promised to look the other way for "minor" Russian boundary realignments...and then we reneged.
We are not in a defensible position, morally or on-the-ground. When you recognize you are in-the-wrong and when you cannot prevail, you negotiate the most graceful, expeditious exit possible.
Opinions will vary wildly on this topic.
But you might swing by the local VFW and buy an old guy a few beers and ask him how long he expected to live if the balloon went up in Germany in 1976.
The most recent numbers I found on a quick search indicates that $175 Billion (as of 09 May 2024) has been allocated for Ukraine, of which Ukraine has directly received $107 Billion of that - the balance being spent in the U.S. to support manufacture of weapons shipped to Ukraine.
DeleteThere are two camps in terms of the spending. The first is that $175 Billion is cheap compared to an actual confrontational war. The other is that $175 billion is ultimately money that is borrowed, not money just sitting around. It will have to be repaid, and the repayers will be tax-payers - both the principal and the interest.
Either way, as a note yesterday the U.S. surpassed $35 Trillion dollars in the National Debt - an increase of $2.35 Trillion in the course of a year. Unfunded liabilities are estimated (as of today) at around $218 Trillion.
Arguably, even if the amount itself is small, the principal remains that one should not spend money one does not have. And given our situation, we have none.
It is ALWAYS timing... For better or worse, and exacerbated by the dems 'free money' spending, which drove inflation, which drove the interest rate higher to bring inflation under control... sigh
ReplyDeleteThe money we're sending to Ukraine is small compared to what is borrowed yearly for major government programs.
ReplyDeleteWhen the economy is growing, the government needs to print money to match that growth - but inflation happens when they print more money than matches economic growth, and especially printing money when when there isn't economic growth!
Even under Obama, there was substantial growth that mostly balanced money printing (and most of what he printed went into the stock market, not the general economy). Biden has had little to no growth and has printed even more money than anyone else - the out of balance money supply is more responsible than anything else for the inflation we've seen.
Jonathan
Honestly Jonathan, aside from the morals of helping Ukraine kill off its citizens-soldiers with dribs and dabs of weaponry (WowWee, MSN just announced Germany sent Major support today to Ukraine to fight the Russian. Turns out reading past the puff, 5 Leopard tanks of questionable mechanical condition)...
DeleteWhen your BROKE, do you justify that 9.00 plus tip (or Ukraine Graft) Starbucks coffee or stop spending on your credit cards?
I really HATE it's cheaper than fighting a major confrontation against Russia stuff.
Mothers on both sides still cry. But it's Sports Ball to too many of us in America protected by oceans.
I don't disagree with you there - I believe we should have more discussion and justification of our efforts in Ukraine.
DeleteMy major point there was to not blame Ukraine for inflation as some did - massively larger domestic spending is to blame instead.
Jonathan
Don't forget the amount the gov sent to Ukraine is a drop in the bucket compared to the over 5 trillion spent on Covid. There are only a couple of markets that can absorb those large of cash flows, one is housing and the other is the stock market which is a leading reason why both are overextended and inflation burns on. DB in Lapeer co.
ReplyDeleteExactly!
DeleteJonathan
And history shows over and over again what happens when massive debt spending makes a HUGE Stock market.
DeleteWho wants to catch the falling knife when the bubble pops?
Going to get expensive to eat, buy fuel and all that.