Comments on: Bernanke and 87-year-olds with mortgages

By: BobinBudapest

BobinBudapest — Thu, 26 Jan 2012 15:52:15 +0000

There are significant tax advantages to having a mortgage. Perhaps, given our new perspective on exactly what damage debt can do, we should use the tax laws to discourage people from assuming such levels of debt. That means doing away with the tax relief on mortgage interest.

That said, Reagan disallowed write-offs on credit card interest, but it didn’t seem to discourage people from running up their credit cards.

Nonetheless, the problem seems to be centered on debt, its role in suppressing economic activity, creating moribund banks, locking people into their homes (and jobs) and, importantly, creating asset bubbles.

While debt shouldn’t be prohibited (how could it be in modern capitalism?), at the very least debt shouldn’t be encouraged with tax breaks.

By: Amelia196

Amelia196 — Thu, 12 Jan 2012 20:04:20 +0000

The post by “Wesatch” nails it. The prudent people who have paid off their mortgages are being laughed at by none other than the president of the Federal Reserve Bank.

By: drdebt

drdebt — Fri, 16 Dec 2011 16:54:06 +0000

You are totally missing an important point: There is most likely no prepayment penalty on Mr Bernanke’s new mortgage. He apparently wanted the option of a lower minimum monthly payment that a 30-yr mortgage allows, with the ability to make larger payments, (principal reductions), as he sees fit. Of course, he could also just make his older payment applied to his new, lower rate and end up with a less than 30-yr mortgage, too.

For further clarification on drawing incorrect conclusions from data, you might read a still-popular book from 1954, “How To Lie With Statistics.”

By: wesatch

wesatch — Fri, 16 Dec 2011 03:17:10 +0000

No conflict of interest. Baloney. Every soul in America that has paid off their mortgage and has money in the bank at negative rates of interest is paying for the great Bennie’s 4% mortgage.

Savers lose. Deadbeats and debtors win in Bennie’s wonderland of monetary policy. The greatest transfer of wealth in history is happening by fiat right before our eyes at the rate of $750 billion a year. A confiscation of wealth without just compensation by an out of control unaccountable economist.

Nope, no conflict here.