House Prices Don’t Make You Richer — They Literally Make You Poorer

This Week in Money September 17–23

This Week In Money helps you discover the history of economics.

SEPTEMBER 17

1787 — CONSTITUTION DAY “The Congress shall have power to…coin money [and] regulate the power thereof” Section 8, US Constitution.” “Coin” is a verb used in this way, representing the power to issue money. We the People possess the constitutional authority to issue and circulate our own money. Instead, we have permitted banking corporations to “privatize” the creation of money via loans (debt). This is both economic and political madness.

2023–12 YEAR OCCUVERSARY September 17 marks the 12th anniversary of the beginning of a people’s movement to Occupy and shut down Wall Street for a People’s Bailout.

SEPTEMBER 18

1913 — US HOUSE OF REPRESENTATIVES PASSES FEDERAL RESERVE ACT The effort to create a privately controlled (but promoted as publicly controlled and accountable) central bank moved one step closer to reality with passage by the House. Debate now turned to the Senate.

2012 — HOUSE PRICES: WHY ARE THEY SO HIGH (SHORT VIDEO) “Why is it so expensive for us to own a home? Why was there a housing bubble? Why was there a housing crisis?… “So high house prices don’t make us richer — they make us poorer. “Well actually, not all of us — high prices and big mortgages mean bigger profits for the banks. And with an effective license to print money, this guarantees they’ll lend too much.”

SEPTEMBER 19

1812 — DEATH OF MAYER AMSCHEL ROTHSCHILD, FOUNDER OF THE FAMILY FINANCIAL DYNASTY An attributed quote: “Permit me to issue and control the money of a nation, and I care not who makes its laws.”

2008 — US TREASURY SUBMITS DRAFT LEGISLATION TO CONGRESS FOR AUTHORITY TO “PURCHASE TROUBLED ASSETS” (i.e. BAIL OUT BANKING CORPORATIONS) U.S. Secretary of Treasury Hank Paulson, former Chair and CEO of Goldman Sachs banking corporation, submits on behalf of the Bush Administration legislation to Congress to bail out banking corporations that engaged in risky and bizarre mortgages and investments. The legislation, called the Troubled Asset Relief Program (TARP) was a whole 3-pages long. It requested a virtual $700 billion blank check for the Administration. Public outrage was fierce. Calls against the legislation to offices of some Senators and Representatives totaled 100 to 1 against it. The Administration was forced to pull the bill and substitute a new one later. The original TARP bill is at http://money.cnn.com/2008/09/20/news/economy/treasury_proposal/index.htm

2013 — STATEMENT ON CNBC BY BILLIONAIRE STANLEY DRUKENMILLER ON THE FEDERAL RESERVE The Federal Reserve isn’t just inflating markets but is shifting a massive amount of wealth from the middle class and poor to the rich, according to billionaire hedge fund manager Stanley Druckenmiller. In an interview on “Squawk Box,” the founder of Duquesne Capital said the Fed’s policy of quantitative easing was inflating stocks and other assets held by wealthy investors like him. But the price of making the rich richer will be paid by future generations. “This is fantastic for every rich person,” he said Thursday, a day after the Fed’s stunning decision to delay tightening its monetary policy. “This is the biggest redistribution of wealth from the middle class and the poor to the rich ever.” “Who owns assets — the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday.” Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed’s policy is that the rich will spend their wealth and create jobs — essentially betting on “trickle-down economics.” “I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work,” he said. “But it hasn’t worked for five years.”

SEPTEMBER 20

1878 — BIRTH OF UPTON SINCLAIR, AUTHOR AND ADVOCATE OF CALIFORNIA ECONOMIC COOPERATIVE PROGRAM ‘It is difficult to get a man to understand something, when his salary depends on his not understanding it.”

1954 — BIRTH OF LLOYD BLANKFELD, CEO AND CHAIRMAN OF GOLDMAN SACHS “I am merely a banker doing God’s work.”

SEPTEMBER 21

1950 –FEDERAL DEPOSIT INSURANCE LIMIT RAISED The popular FDIC (Federal Deposit Insurance Corporation) limit is raised by Congress to $10,000. The FDIC insures commercial bank deposits against loss due to bankruptcy or default. It was created following the Great Depression when depositors lost their savings when banks collapsed due to speculative investments and/or depositor fears, which led to a run on banks.

2008 — FEDERAL RESERVE BOARD APPROVES APPLICATIONS OF INVESTMENT BANKING CORPORATIONS GOLDMAN SACHS AND MORGAN STANLEY TO BECOME BANK HOLDING COMPANIES Prior to the Great Depression, banking corporations could engage in both “commercial” (traditional loans to individuals and businesses) and “investment” (stock and other forms of speculative activities) activities. Overzealous speculation by banks using depositors’ money was one of the causes of the Depression. This led to the 1933 Glass Steagall Act, separating commercial from investment activities. This law was overturned in 1999, leading to a breach in the “firewall” keeping the two types of financial activities separate. This grant application allowed two of the largest investment banks on the planet to begin engaging in commercial banking activities.

2011 — NATIONAL EMERGENCY EMPLOYMENT DEFENSE (NEED) ACT REINTRODUCED IN CONGRESS BY US REPRESENTATIVE DENNIS KUCINICH (HR 2990) The bill would shift the private Federal Reserve System to the US Treasury Department, end fractional reserve lending by banking corporations (which permits them to lend out many more times the amount of their deposits) and authorizes the US government (in accordance with Art 1, Sec 8 of the US Constitution) to print US money to repair our nation’s physical and human infrastructure. Money issued in this way by the US government is debt-free and inflation-free vs the financial industry which currently issues the vast majority of our nation’s money as debt. No longer would banking corporations have the license to create our nation’s money. That would become a public function.

2020 — TRIPLE-COLUMN COMPARISON BETWEEN MONERN MONETARY THEORY (MMT), THE ACTUAL MONETARY SYSTEM, AND SOVEREIGN MONEY REFORM (SMR) Small article presenting an educational double- and a triple-column comparison to bring out the serious differences between what the movement for sovereign monetary reform thinks is the truth about money, banking and government finances and what Modern Monetary Theory thinks is the case. https://www.monetaryalliance.org/triple-column-comparison/?fbclid=IwAR26ppBBZa0hVNrg-q1kRuvgJbByUsL77GK5JhbFNVCKi0S7JQbZ-N3e2wM

2022 — “54% OF STUDENT LOAN BORROWERS SAY THEIR MENTAL HEALTH ISSUES LIKE ANXIETY AND DEPRESSION ARE DIRECTLY RELATED TO THEIR DEBT” POSTED ARTICLE “…63% of Americans are still wrestling with debt from student loans… “[T]he average student attending a public university in the U.S. borrows $32,880 to get their bachelor’s degree… “[T]hose polled can barely afford or can’t afford their loan payments at all, with minorities like Black borrowers facing the most debt. “Anxiety is the leading mental health condition as a result of student loan debt, the survey discovered… “Anxiety (56%) Depression (32%) Insomnia (20%) Panic attacks (17%) Other mental health conditions (10%)” https://www.cnbc.com/2022/09/21/americans-mental-health-continue-to-struggle-amid-student-loan-debt.html?fbclid=IwAR01k2vVIYIR81UWbE18SqIQfEHKdjZEbFarYWPTBQr3nZwU3TvFpCtFDnc

2023 — FEAST OF ST. MATTHEW Matthew 6:12, “And forgive us our debts, as we forgive our debtors” Born in Palestine sometime in the 1st century, St. Matthew was one of Jesus’s 12 apostles and also one of the four Evangelists, according to the Bible. Matthew authored the first Gospel of the Bible’s New Testament, now known as the Gospel of Matthew. Prior to preaching, he worked as a tax collector in Capernaum. Matthew is the patron saint of tax collectors and accountants. The Feast of St. Matthew is annually celebrated on September 21.

SEPTEMBER 22

1956 — DEATH OF FREDERICK SODDY, NOBEL LAUREATE “It was recognized in Athens and Sparta…centuries before the birth of Christ that one of the most vital prerogatives of the State was the right to issue money.” On money: “To allow it to become a source of revenue to private issuers is to create first, a secret and illicit arm of the government and last, a rival power strong enough ultimately to overthrow all other forms of government.”

1973 — HENRY KISSINGER SWORN IN AS 56TH US SECRETARY OF STATE William Engdahl asserts in his introduction to Gods of Money that then-Secretary of State Henry Kissinger, a protégé of the powerful Rockefeller corporate empire, stated: “If you control the oil, you control entire nations; if you control the food, you control the people; if you control the money, you control the entire world.”

2013 — HOW THE ECONOMIC MACHINE WORKS BY RAY DALIO (VIDEO) “Created by Ray Dalio this simple but not simplistic and easy to follow 30 minute, animated video answers the question, “How does the economy really work?” Based on Dalio’s practical template for understanding the economy, which he developed over the course of his career, the video breaks down economic concepts like credit, deficits and interest rates, allowing viewers to learn the basic driving forces behind the economy, how economic policies work and why economic cycles occur.

SEPTEMBER 23

1998 — TALK BY MICHAEL CHOSSUDOVSKY, PROFESSOR OF ECONOMICS “Monetary policy is in the hands of private creditors who have the ability to freeze state budgets, paralyze the payments process, thwart the regular disbursement of wages to millions of workers and precipitate the collapse of production and social programs.

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