Short Story: "Foreclosed Future" (part 11 of a series)

I haven't sent email to anyone about this new home for my blog posts, so if you've somehow found me again, welcome back. If you're a new reader, I'm glad to have you on the team. After that TLA spook shop shut my last blog and scrubbed all signs of it from the 'net - including the Wayback Machine - I didn't know what to do. Fortunately, the folks at the FW Diner, crew and customers alike, stood up for me when the goons broke cover to threaten me, and things just took off from there.

Al Klee, the union guy who just took over for the company's murdered CEO, was night manager. He asked me to speak at one of their meetings. I gotta say I was impressed. When the 'gang-of-9' upheld the federal judge's ruling on the SandHill case that granted full rights of citizenship to corporations, I thought that was gonna wrap things up for us flesh-and-blood types. But then Consolidated Communications got strung up for being a mass-murderer, and Fremont-Wayfarer was sent up river for a three-year sentence after looting their own employees' self-insurance fund. The only thing that could possibly have topped that was what happened at the FW Diners. Ed Reese flew the scheme before he was offed, but the union turned it on its head. If you haven't dropped a dime at one of FW's redecorated prison chow halls, do yourself a favor: go get lunch. Better yet, bring some friends. But don't schedule anything afterwards, 'cause you're gonna want to stay and rub elbows with the swarm of subversives that hang there. It's a safe haven, too. Private property.

So anyway, I figured I'd launch into a tirade against the bankers and see how the union reacted. It was intense. There was so much pent-up anger and frustration in the hall over financial matters that seemed so beyond their control. All they wanted was something to do about it. It really caught me by surprise. I didn't know what to tell them, so I spent the time they gave me letting them vent. They really wanted to talk about all the injustices they've seen, and once they'd done that they realized how many of them shared the same problems. Getting that much done was worth the effort, but I felt so overwhelmed that I just thanked them and said I'd do a follow-up on my blog -- if I could convince anyone to risk being associated with me. So here I am, and here's that follow-up...

The biggest topic of the night was mortgages. The sense I got from a lot of people at the union hall was that they felt their mortgages were being used as a weapon to bludgeon them into submission. And they're right. What they didn't understand was the nature of the battle -- why it was being used that way.

To understand it, you have to go back a few steps and look at how money is created. Contrary to what we're lead to believe, the US government doesn't issue money any more. The folding money you carry around may have been printed by the Treasury Department, but they did it as a service to the Federal Reserve Bank. When the government wants to put money into circulation, it borrows the value of it from the privately held Fed at interest, and the Fed has the Treasury Department print the stuff up for them. Those dead presidents actually represent a debt held by the banks which collectively own the Fed. And the Fed creates the money that the government borrows from it by making some entries on a tally sheet. So old Ben Franklin stands for a hundred dollars in debt, and the money used to loan him out doesn't even exist. The whole scheme is a sham.

Well, the 'money' you borrowed to buy that house or truck was created the same way. It doesn't exist. The papers may say that the bank owns the house you're paying a mortgage on, but the money it fronted you is imaginary. But for imaginary money, it's still amazingly useful. You see, when you take out that loan, the bank logs the amount as an asset that you owe to it, and then proceeds to lend 90% of it out to someone else. Call it another mortgage, a little smaller than yours. Repeat the process until the fraction gets too small to bother with.

Now let's throw a monkey wrench into the works: you just lost your job, and can't ante up the juice for your payments any more. Worst case? Foreclosure. You lose your home. But there's really more to it than that, because of what the bank did with the money you owed it. If they have to write off your debt, they lose the imaginary money you would have eventually coughed up, and with it the basis for a whole cascade of other mortgages. Now, if you're the only one who defaults, this isn't a big deal, because they've got lots of spare money laying around to cover for it. But like Arlo Guthrie asked in 'Alice's Restaurant", what if fifty people a day did it? Things start to get a bit sticky.

You'd think that it would be a pretty simple matter for the mortgage holder to seize the property for non-payment, wouldn't you? And you'd be right, as long as some institution actually held the mortgage you're paying. But not all of them are. A large number of mortgages have been rolled up into investment packages with guaranteed returns, and then offered to institutional investors like retirement funds as a way to safely increase the value of their clients' ball of money. Once you've done this, ownership becomes diffused. There isn't any one owner any more. And to complicate things still further, they oversell these things, too.