Would You Like Uncle Sam to Payoff 90% of Your Home Mortgage?

There was a very disturbing statistic presented in a Bloomberg article this week titled "US Taxpayers Risk $9.7 Trillion on Bailout Programs". The opening sentence said: The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90 percent of the nation’s home mortgages.

Think about that for a moment. Payoff 90% of the nation's home mortgages. What a concept. Home equity would be fully restored. Market values of homes could be written down to their real value without adverse consequences for the homeowner. If people wanted to, they could then borrow against their newly paid off home mortgage to help get the economy moving again, or not. The power would be restored to the people and the economy.

Now before you go accusing me of abandoning free markets and capitalism, I will tell you we haven't had free markets or real capitalism in the United States for a long, long time. We have had a mixed economy. Some free markets, some socialism. It's just that now whatever remaining remnants of the free market there may have been, have been diluted beyond recognition with these massive bailouts.

The current total of $9.7 trillion will ultimately come from the taxpayers, which is you, your children and your grandchildren. Everyone will pay for this through higher taxes. The dirty little secret is that by giving the bulk of this money to the major banks in the form of loans, guarantees and bailouts, these banks will turn around and eventually loan this money back to the very same taxpayers who gave it to them in the first place, with interest. In other words, the taxpayers are going to pay for the bailout through higher taxes and they're going to pay through higher interest on their own money! This is absolutely outrageous and immoral. When people finally begin waking up to this one fact (and they are waking up to it) confusion will turn to outrage, and all politicians, regardless of party, will be on the receiving end of a no vote come the next election.

Right now, we're applying socialism to the banks and capitalism to the people. Perhaps we should turn that around so that we payoff everyone's home mortgage and apply capitalism to the banks. The big banks will fail. The community and regional banks will grow. The people will be free and we can start all over again. And maybe, just maybe, the next time we'll get it right. But, unfortunately, that is not how this story is going to end. And that's why you want to protect yourself by owning assets that will increase in value during the coming hyperinflation.