Wealth Transfer vs. Wealth Creation

Zombie mortgages, taxation, and the death of everything else

Have you heard about zombie mortgages? They are debts that occurred, often in the form of a second mortgage on individual's homes that were thought to have been dead and buried but have now come back to life. These seconds were prevalent in the pre-housing crash of '08. In the crazy "three-card-Monty" game of mortgage lending that drove up property values in the early 2000's, first mortgages where of the conventional 20% down variety. But instead of insisting that borrowers have the 20% down in liquid cash, they were allowed to take out a second mortgage for up to 100% of the 20% deficiency. It is an entirely different dissertation, best conveyed by the movie, The Big Short, as to why this was allowed to happen. Suffice it to say, that first and second mortgage scenario put home "owners" into their homes with very little or no skin in the game.

Then the crash came. Property values plummeted. Banks holding paper on upside-down homes, panicked and President Bush stepped in to "sacrifice free market principles to save the economy (free market) from collapse." Congress passed TARP (Troubled Asset Relief Program) and authorized up to 700 billion dollars to bailout those freewheeling lending institutions.

With the banks securely nestled under the protective wing of the Treasury Department there still was the problem of borrowers owing more money than their homes were worth, especially those borrowers who opted for the "no money down" second mortgage scheme. However, for the public to accept the TARP bailouts, some scraps from the banker's feast had to make it to the homeowners who were upside-down on their mortgages. Because the whole TARP thing would collapse like a George Soros funded green tent if some relief did not reach the individuals residing in the troubled assets themselves. Plus, the last thing the mortgage bankers wanted was those reduced value assets back. It was much better to concoct a plan to let the homeowner pay their way out of the hole created by the fast and loose lending practices that caused the '08 crisis than to have the hoi polloi's smelly assets stink up the ivory towers of Wall Street.

As a result, borrowers were allowed to restructure and consolidate (so they thought) their mortgages. Once variable rate mortgages were converted to fixed rates. Then, as the Obama administration sought to hide a flaccid economy as he limped towards his reelection in 2012, interest rates set by the Federal Reserve were kept artificially low. This also helped homeowners right-side their financial ship and allowed some to bring their heads back above water. Borrowers, who thought the second mortgage debt was consolidated or forgiven in the bail-out type programs went about their lives rebuilding their financial houses. However, those seconds were not "written off" as bad debt as uncollectable assets. Instead, they were sold, for pennies on the dollar, to opportunistic and patient investors. Now that property values have finally recovered and homeowners are now sitting on some equity once again, those mortgages have come back to life. And like once lifeless corpses, that awaken to wander the earth to terrorize the living, these zombie mortgages have awakened to ravage homeowners who are finally asset positive on their home owning investments.

But what do zombie mortgages say about the wealth of a nation? In economies, zombie-like predators are about a useful as tits on a boar. They do nothing, they nurture nothing, and they inspire nothing. Zombie mortgages collectors are merely transferring wealth. Through the power of law, they are transferring equity in someone's property to someone else and nothing more.

There are two types of economies, wealth transfer and wealth creation. In its purest sense, true communism is a complete wealth transfer economy. It takes all the means of production, all the property, and all the human capital as wards of the state and redistributes it " to each according to his needs." In wealth transfer economies, there is no growth. The entire economy is thought of as a finite pie and big daddy government is there to make sure everyone gets their fair share slice.

In a true capitalist economy, which like a true communist economy truly doesn't exist, wealth is grown by the management of the means of production. The combination of property, commodities and human capital creates value greater than their individual components and trade in the free market with other like value enhanced commodities and services. Thus, wealth creating free trade economies have infinite growth potential.

Now, the world has never seen either a pure communist economy or has it experienced a pure free-trade economy. Governments exist to manage one of these ideals. But where one's government operates on the wealth transfer to wealth creation continuum dictates the degree to which an economy can grow wealth. It also is a representation of where that economy is on the atheism to deity continuum.

It is no mere accident that communist regimes are anti-God regimes. One cannot assume the mantle of "pie cutter" if the invisible hand of merit, grace and forgiveness plays a hand in the economy. Conversely, just like faith without works is dead, so too is capitalism. For the communist, work is the punishment imposed upon those expelled from Eden. And like the serpent who deceived them, they are content to slither about the earth condemning the Creator for imposing the necessity of work for survival. On the other hand, work to a capitalist is divinely inspired. It gives special meaning to the eight hours a day that are not consumed by refreshment and sleep. Work allows for the full use of knowledge, to fashion with hands as well as minds, infinite possibilities. Every advancement we enjoy, like the device you are using to read these words, stems from this notion of infinite possibilities not finite redistribution.

So, if this is true that capitalist societies foster infinite growth, why are not all governments striving to provide free market economies? Because the fruit on the grith tree is too sweet. Whereas the tree of knowledge, was, is, and always will be in the sole possession of the God who created all, the grift tree is the dominion of lord nefarious. It is the tree of short cuts, incomplete thoughts, and quick bucks. The grift tree is finite, its fruit must be divided, and those who hold the power of division derive benefits of picking the best fruit first. On earth, one can amass fortunes off the fruit of the grift tree. Babble was built on such fruit. When Emperor Theodocious paid the hefty annual 2,100 pounds of gold tribute to the Huns to not invade Constantinople, he was tending the grift tree. He also carved his “big guy” percent of wealth transfer from the Roman citizens to the encamped Mongols outside the gates of the Eastern Empire. Those same percents are falling into the pockets of today's grift tree keepers as they transfer wealth from hard-working Americans to the war-tourn lands of the Ukraine and Middle East. It was grifting tree managers that concocted, first Covid protocols to isolate and divide nations, then magic vaccines that "in the darkness" bound them.

Nothing in the post tree of knowledge, wealth transfer days of the West will stop the zombie mortgage grift tree harvesters from enacting their wealth transfer upon the beleaguered homeowners caught in the zombie mortgage snare. Afterall, the trap itself was created by the pre 2008 mortgage grifters. It was then fortified by the Bush "sacrifice" grifters who "saved" the free market from the wealth creators by becoming wealth transfers.

As we honor our fallen warriors, heroes, and countrymen this Memorial Day, know that they died protecting the tree of knowledge and are basking in that eternal Light. For those of us still here, that tree of knowledge is our only hope for regeneration as a nation of wealth creators. But the seducing powers of the grift tree are powerful. God will not be mocked, and His record of sowing and reaping is undefeated. Subsequently, all who tend the grift tree will suffer - towers will fall, marauders will be allowed to plunder, and nations will crumble. Such always befalls nations that live by wealth transfers instead of wealth creations.

For when you live by the tree of knowledge God does not punish, he merely insists, if you desire to obtain the knowledge of Me, start by acting like Me. Start by acting out of love, grace and most of all, forgiveness.