To The Point On The Mortgage Crisis
The mortgage crisis, a crisis caused in large part by the greedy corporate fucks in the mortgage banking industry is at the root of our current economic woes.
The Fed in an attempt to stave off a worse crisis lowered interest rates. So you'd think you could get a better rate on a mortgage today, but you'd be wrong.
Reeling from their self-inflicted losses the bankers are using the lower rates they get their money at as a tool to screw the consumers a second time. Lower rates no, higher profits yes.
A good example of unfettered capitalism at its best.
Comments
I heard the same on NPR today and, not sure why, I was a little surprised. But then I regained my sanity.
Well said Norm. Although a bit restrained :-) I guess it goes without saying that having the Fox (candidate) guarding the henhouse helped create this perfect storm.
I think it would be unpopular here to suggest that while "greedy corporate fucks" may have had a part in creating the mortgage mess, they are also the ones who a) provide the competition to keep mortgage rates low to begin with and b) provide the stimulus so that we can get out of the mess as well. Fed discussion aside, I feel attacks on the notion that bankers seek profit are unwarranted.
Paul Krugman has offered a masterful analysis of the Republican undenken on this issue: (2003) "The economy is doing well: obviously this is a result of deregulations and the Bush tax cuts!" (2007-08) "We have just fucked ourselves by deregulating loan agreements: we need to make Bush's tax cuts permanent and stimulate the economy by giving further tax rebates to big corporations!"
Okay, 2 disclosures first, both my parents are realtors in CA and I am an economist as well as a law student who has worked for real estate law firms.
I have been tracking what the author has said is exploitation of the market to make even greater profit, and I believe this to not be the real cause.
Lower interest rates should lower the cost of borrowing for everyone, including mortgagees since the cost of lending overall decreases. the problem with housing is that there is a glut in mortgages. Mortgage companies/banks have already bought trillions of dollars in mortgages and then resold them on the open market in the form of bonds, secured by insurance. What is happening now is a complete un-gluing of this system. We have insurance companies that secured all this debt that are going bankrupt or having their credit lowered, which means they cant secure anymore debt. In turn investors dont want to touch all these mortgage backed securities/bonds with a 10 foot pole because no one knows which ones are bad and which ones are good. And the banks are left exposed. Sure they can issue more mortgages, but who can they sell them too? The market for these bonds is completely gone, no one wants the bonds already in the market, nevermind new ones. meanwhile whole neighborhoods (especially here in CA) are being abandoned and foreclosed on. So many people are upside down on their mortgage that it makes more financial sense for them to just wait for the bank to foreclose on them. Realtors literally refer these poor homeowners to tax attorneys, who in most cases tell them to just go into foreclosure instead of doing shortsales because of the astronomical costs in the form of taxes on all the losses. The point is, banks are being squeezed. On the one hand they have their insurers blowing up on them and their traditonal bond buyers who no longer want to buy any of their mortgages, and on the other hand they have all of these bad morgages they are still holding going bad on them. the result is uncertainty in anyones creditworthiness. Most people buying in this market are making full cash offers or they are making very large down payments and have really good credit. It does not matter how low interest rates will go, so long as there is a crisis of confidence and liquidity the banks and the mortgagees are going to be stuck with higher interest rates. Im not defending the banks, god knows it was their greed that in part lead to this disaster, but it is not accurate to say that the banks are not offering better credit to borrowers now because of greed.
Adam, just curious, did Krugman use the word "undenken" or "umdenken"?
I laugh at my home country more and more. There has in my life-time never been a better example in this trickle-down mess-of-a-system of the bottom giving-in to the top. Go around any city in America. Listen to all the wannabes and their talk about what they WANT - and what they ALL think they have the inalienable right to deserve. Yeah, I guess PT Barnum was right about our great nation... Suckers.
Banker/Corp.: (Implement supply side economics, early 80s) Oh, you WANT more? Well then...
Schmuck: Oh, thank you. I didn't know it could be this way... And this career is wonderful. I can procreate. And my partner in life can join me in our quest for... Yes, I want a bigger boat (or a jet ski or a third car or...)
(As the Schmuck and the Banker dabble with each others genitals, the banker is able to incorporate one more nail in the living-standard coffin, convincing even more Schmucks that their fifteen minutes of the American Dream is only a signature away. Of course, the small-print of the contract is made very clear. In summary, the small print says (among lots of other political ramblings): unbridled free markets are really good; corporatizing (spell?) is really good; there's plenty of room in the whole show for the South to finally be vindictive regarding their lost cause.) United We Go To The Mall. -tgs-
I'm with Tommi on this one. I worked in banking for the past two years. Very large bank, but more conservative in its lending practices. You haven't heard much about them in this whole subprime fiasco because they rarely deigned to acknowledge the masses with crappy credit.
Anyway, as much as I dislike the banks and what they have done with this mess, the American people are as much to blame as the banks for it. What most news reports fail to mention is that every single person/couple that has a mortgage issue is an ADULT. A verifiable, grown-up human being. They made their beds, now they need to lie in it.
An adult applied for the loan. An adult saw the loan documents (notice I said "saw", not "read"). An adult signed those same documents. Is it 100% the banks fault that the customer didn't read the loan docs? Didn't speak up or ask a lawyer to review the docs if there was something they didn't understand?
I say no, it is a 50/50 split. The banks are slimy, disgusting, morally and ethically bankrupt institutions. The people are grubby, envious, ignorant sheep chasing the highly overrated American dream. Its like two parasites eating each others tails.
To say one is more guilty than the other is like saying it is the Sun's fault that we have global warming.
Note: When referring to the Sun, I mean the big fireball thing about 93 million miles away, not the Phoenix basketball team. That would just be silly.
poolaka, I'd be scared if the world was actually as bad as you made it sound. So, as a former banker, are you slimy and disgusting or as a person are you grubby and envious? or are you all of these things?
I have to say that I'm in agreement with palooka's sentiment. Bankers are willing feeders of American's unquenchable materialistic thirst. The average American home swelled from 983 square feet in 1950 to 2,349 square feet in 2004 as the average number of children has declined. In my town, I drive by some pretty nice homes and wonder just how many of them are drowning in debt - thinking about yard sales to get rid of the excess stuff.
The trickle-down shell game that conservatives have been selling has had some pretty enthusiastic buyers out there in the heartland and it seems that we just won't learn until they bring the entire house of cards crashing down about our heads. Our fearless leader rides into office and tells us that 'Americans deserve more of their own money back'. Yeah! So he rebates a few bucks to the suckers, carves out a king's ransom for his pals, and borrows from our children to pay for the party. But how to create the illusion of good times? Mr. Greenspan and associates lower the cost of banks borrowing to levels below the rate of inflation and the suckers plug in their needles the eyes roll back in their heads. Housing prices predictably rise - the suckers convince themselves their paper gains are real and borrow more on the evanescent equity.
To be honest, the experience of having been evicted from a home in upper-middle-class Ken-and-Barbieland when my parents chose the great American engine of downward mobility (an outlandishly nasty and expensive divorce) helped to inoculate me from the sales pitch. Is a widespread crash - a depression - what Americans need to learn for a while what suckers they have been?
@mpkomara, Actually, I am none of these things. I've always disliked any type of sales environment because of the environment and willingness of managers to push you beyond ethical boundaries.
I initially started with the bank as a sales-dude (after serious prodding from my roommates because I wasn't happy at my job prior to the bank), but continued to hold my ethics. That's a large part of the reason why I failed in the sales role, I wasn't willing to push folks into products and services that weren't good for them. You know, the ones the bosses wanted us to push and makes the bank the most profit.
So, I moved into straight customer service with said bank. Having an enormous amount of experience, I was excellent at this position(not conceit, just an observation that after 15 years of cust. srvc. and dozens of stellar reviews and compliments from customers, I know my crap). I saw the entire collapse from both sides.
I saw the bank pushing this and pushing that. They would deny this customer and that customer. Sometimes for completely arbitrary reasons. So many hoops to jump through for some, so little for others. I saw the new products come out that catered to worse and worse credit. The mortgage division eventually offered a product that allowed someone to buy a house with no documentation, with credit in the low 500s! Talk about enabling.
Then, I also saw the customers that would haggle over the most niggling things, but then wouldn't even read 99% of the documentation. For example, they would argue until they were blue in the face to get another $10k valuation on a +$300k house just so they could get a huge line of credit or whatever and then not even look at the closing docs. They would just sign where the banker told them to.
As for my ethics, I can rightly say that I have no regrets. I lost several deals both as a salesperson and a cust. srvc. dude because I took the time to make sure my and other clients knew EXACTLY what they were getting. This included highlighting key points in closing docs they had not taken the liberty to read.
Yes, I ruined others deals because those sales people had not explained everything. While I appreciate your question, I believe, in this instance, my ethics are beyond reproach.
Tim, I don't understand your point about the average sq. ft. of house per child. Provided that not everyone is drowning in debt (and they aren't), a larger number sounds like a good thing.
Poolaka, gold star for ethics in customer service. I still think your outlook is too grim for bankers and homeowners alike.
A) Mortgage rates aren't spread off the fed-funds rate. You're confusing the very short-term end of the curve with the longer-term.
B)I suppose all losses are self-inflicted. But what creature wouldn't posture more defensively following hemoragging?
C) If you don't like your lending choices, get a private loan or go to prosper.com or something. Oh, those rates are higher? Then perhaps an organized, liquid market does indeed breed lower rates.
It's easy then, to assume (and i'm sure you saw it) that there are people on the opposite end of your spectrum, who obfuscated the view of what the customer was actually signing to throw in things and costs the customer didn't need.
Is it to much to ask for a rule of law in this country? If the lender actually input the correct information, many of these people would not (should not) have qualified for these kind of loans! A lender who approves someone on a 2% interest rate, but doesn't check to see if that same buyer can afford the 9% rate when the ARM adjusts in 6 months, is a crook. Anyone who told buyers that a Sub-Prime loan was acceptable (a loan based off of incomplete/incorrect information about the buyer) is a crook.
Anytime a 19 year old kid can get 2 loans for 2 $600,000 homes on minimum wage (a Utah news story), someone is a Crook, and I don't think it's the kid.
Now, are the people who bought into this garbage accountable at all? of course. But it's kind of like blaming someone in a car wreck for a defective seatbelt. Yes, it's their fault they got into a car wreck, but not their fault the car's seat belt and airbags were defective.
More than a third -- 36% -- of those who owe more than $10,000 on their cards have household incomes under $50,000, according to the VIP Forum analysis.
13% who owe that much have household incomes under $30,000.
The percentage of disposable income used to pay debts is still near record highs.
The median value of total outstanding debt owed by households rose 9.6% between 1998 and 2001.
Bankruptcies set another record in 2003, with 1.6 million personal filings, the American Bankruptcy Institute reports.
source
Well, of course not everyone is drowning in debt. But my point is pretty clear I thought, and was prompted by poolaka sentiment that the American dream is overrated. In my opinion, Americans carry way too much debt on average - including mortgage debt. If, at the same time, average house sizes are 2.5 times what they were two generations ago, then some of the blame for their debt load is their demand for more than they can afford. Their kids will not suffer neglect or live in shame in a 1700 sq. ft. home - and just maybe their kids will be able to avoid loading up on college loans if their parents redirected some of that oversized mortgage payment to a college savings plan.
Your source validates mpkomara's statement: that everyone's not drowning in debt. It's the exception, not the rule. Presumably the 1.6M bk's in 2003 aren't responsible for the rising sq ft/child ratio.
Basically, your msn article affirms that not everyone is responsible with his credit line. Makes sense.
Tim-
I think the quickest way to slow the housing appetite would be to kill the mortgage interest write-off (and perhaps the cap pagins exemption on homes) that costs us, together, over $100B annually. The fact that we tax inflation on non-housing investments yet subsidize borrowing for housign investments skews everyone's allocation of capital toward housing.
We ought to remove that (massive) incentive
Did too:
The truth is that the blood-bankers were culpable in this greeding-frenzy; so stop lying to yourselves about it. Your reactionary-libertarianism is lame.
Yep, just thought some statistics were interesting. It's not all bad, but it's definately not great statistics for americans to have.
Tim's got this one right.
As a former real estate agent, I was shocked at what mortgage brokers were willing to lend people who had zero savings and mountains of credit card debt.
These lenders and buyers deserved each other and nothing but a foreclosure is going to teach either of them anything.
For the mortgage brokers, it was all about closing the loan and selling it on the secondary market (this often happened before closing!) For the buyers, it was all about living in a big house and telling people they own it (even though they have no equity).
These buyers were really renters, and the lenders were really landlords. When the rent gets too high, renters move out.
Agreed, mortgage brokers are usually scumbags. But they're not the bankers; the bankers are actually on the hook. Consequently, the banks/investors have paid dearly for this, while the mortgage brokers have little downside.
Probably best to clearly distinguish brokers versus the banks.
Joel-
Brilliant analysis. Thanks. I didn't realize how black-and-white it all is.
Can I point out that this "feeding frenzy" is exactly the same as the tech boom/bust? People are so lame. They get loans they cant afford and then cry foul when they cant pay the bills.
While I have no pity for the idiots at the banks who gave these loans, nor do I have any pity on the people stupid enough to borrow on ARM loans without seeing if they could possibly pay for it.
I'm not sure what is being proposed here in this discussion apart from a general appeal to remove greed from the housing market, and a re-evaluation of the American Dream.
I don't even know what to do with Joel's comment, but the frustrating thing is that its essence is the argument of most of the angry people here. So, how do you propose we eliminate "blood-bankers"? What even qualifies as a "blood-banker" or a "greeding frenzy"?
Why are we so angry?
I'm not angry.
Having studied business cycles and real estate, it is no surprise that after a couple decades of steadily rising prices, bankers and homeowners forget all about cycles and expect the rising prices to last forever. They both believe this will make up for any foolish decisions they make, so they make ever increasing amounts of foolish decisions.
This correction, and that is exactly what this is, will bring housing prices back to earth. No doubt it hurts people who made foolish decisions, but it also allows reasonable people who save up money for a down payment of 20-30% to get a house for a reasonable price and pay it off quickly.
This correction needed to happen. If there is anything to be angry about, it would be that nobody takes financial advice from their grandparents anymore.
I'm not sure what is being proposed here in this discussion...
Well, nothing terribly complicated.
Proposals:
For the government:
(1) Do not use monetary policy as the sole instrument by which you attempt to influence the economy. Or rather, "fiscal policy" does not consist of simply cutting taxes for the wealthy, pretending, or just plain lying about whether it'll trickle down. If you want to run an empire, maintain even a tattered social safety net, and siphon off huge sums for your cronies, you have to increase taxes or enslave future generations.
(2) Making easy money available on occasion may be warranted, but when it is, very close monitoring of lending practices and total transparency in loan reporting is essential. The idea that the market will regulate itself is utter horseshit. Easy money for anything but a fairly short period will trash your currency and undermine confidence in your economy.
For borrowers:
(1) Grow up and stop trying to keep up with the Jones. Anybody with a half a brain can estimate your likely income and make a reasoned guess that you are spending more than you earn in an attempt to impress others. Which means, of course, you look pitiful. Bad things happen, so quit making your personal economic assumptions based on the rosiest scenario possible.
(2) Consumption is not happiness. Debt will ruin your ability to sleep at night and force you to take or stay in a job you hate just so you can continue to acquire more stuff.
Hang on - you mean a capitalist institution supports capitalism? How horrible!
Seriously, is anybody able to argue the point that these contracts were entered into by adults who have a responsibility to understand the contract before signing it? As much as everyone wants to just call the banks 'evil' and move on, this falls squarely in the realm of personal responsibility.
You know who didn't sign on for variable-rate mortgages? Smart people.
"As much as everyone wants to just call the banks 'evil' and move on, this falls squarely in the realm of personal responsibility."
I'm thinking you didn't read many comments on this thread Calligraph. If you did, you would see several of us have placed much of the blame on the borrowers.
Would you agree the lenders a 100% responsible for their current problems? Nobody forced them to lend billions of dollars to people who were unable or unwilling to pay it back. Right?
oops, I that should have read: 'Would you agree the lenders ARE 100% for their current problems?'
I'm thinking you didn't read many comments on this thread Calligraph. If you did, you would see several of us have placed much of the blame on the borrowers.
Like he said.
The borrowers were stupid and irresponsible - I never said otherwise. But that doesn't mean the lenders were blameless - they stand to lose money for their institutions and damage confidence in the entire financial system. If I have understand what I've read about this mess correctly, many of the lenders were stupid and and often unethical, since the originators of many of these mortgages (like the mortgage brokers Syngas mentioned) bundled them together in ways that made their risk less transparent to those who assumed them. Lot's of blame to go around here.
Syngas said:
Oh my, I'm agreeing twice with Syngas now. I think I need another beer or perhaps a lobotomy! ;)
The banks deserve blame. The buyers deserve blame. However, the true villain here is the Federal Reserve.
When I can borrow money at less than 3%, with inflation at more than 3%, there is NO GOOD REASON to NOT use credit for everything I buy.
And this has been the situation since the "roaring 90's".
Granted, rates haven't stayed that low. Neither has inflation. Point being: if I have to lose 3% of my value, be it to interest or inflation, the only difference to me, the consumer, is when I take possession of the good or service.
We all understand the ecological, moral and ethical bankruptcy that is created by our consumer culture. Monetary policy is the machine which keeps this going.
Savings rates are NEGATIVE. Not low, negative. As a whole, we are now spending more than we earn.
This results in impulsive consumerism, ecological destruction, and perpetual debt.
And, because our FIAT currency is a function of our debt, as our economy grows, so too does our debt.
http://zaphodforpresident.com/2007/04/11/money-as-debt/
When you speak of the economy, you must always first consider the role of our Federal Reserve.
To blame the "free market" for the actions of a semi-private committee is ludicrous! Need I remind you, the Congress holds oversight on the Fed!
And let's all face reality: this mortgage crisis is the result of "cheap money". There is no debate about this.
So who prints that cheap money? Who makes it cheap?
And why aren't you blaming THEM?
Zaphod, Like I said, there's plenty of blame to go around, and the Fed already got some:
But how to create the illusion of good times? Mr. Greenspan and associates lower the cost of banks borrowing to levels below the rate of inflation ...Housing prices predictably rise - and the suckers convince themselves their paper gains are real and borrow more on the evanescent equity.
and...
Do not use monetary policy as the sole instrument by which you attempt to influence the economy. ... Making easy money available on occasion may be warranted, but ... easy money for anything but a fairly short period will trash your currency and undermine confidence in your economy.
Zap, where do I get one of them 3% credit cards?
LOL! Oh Zaphod. I only wish that I could borrow money at less than 3 percent! lol
Three percent is the overnight rate banks charge each other, not the rate that you or I can "borrow money"..
Don't panic, Zaphod, the Fed is mostly harmless. It's clear you have a heart of gold and have put in a lot of deep thought into this matter, as have I, and the only real answer is 42.
I mean, yes idealism, yes the dignity of pure research, yes the pursuit of truth in all its forms, but there comes a point I'm afraid where you begin to suspect that if there's any real truth it's that the entire multi-dimensional infinity of the Universe is almost certainly being run by a bunch of maniacs; and if it comes to a choice between spending another ten million years finding that out on the other hand just taking the money and running, then I for one could do with the exercise.
So long, and thanks for all the fish!
re: 3%
I should have said 7%. Inflation is a lot closer to 7% than 3% right now, so the math works out the same.
re: asshat
I really miss Douglas Adams sometimes.
I am not being clear:
When inflation is greater than or equal too the rate of interest, there is no rational reason NOT to buy everything on credit.
That was my point.
So if your VISA charges 20% APY, and inflation is 21% per annum, you're still better off financing everything.
Ditto a 6.5% mortgage with a ~7% (including energy & medical) inflation rate.
Well, you don't really mean that - because that is exactly the logic that drove the housing bubble to inflate so nicely. If the thing you're buying isn't close to worth what you're paying for it, it doesn't matter how good the credit terms are - which, of course, is what you mean by blaming the Fed.
Zaphod, I owe you many many thanks for the book recommendation "The Road to Serfdom". In return, I suggest you listen to the Milton Friedman series on econtalk.org. you'll find his opinions on the Fed to be in line with what you are saying. also, check out juliansimon.com.
Zaphod,
I recommend that if you put a towel over your head, then you won't have to deal with the contingencies of life that you don't see.
"Brilliant analysis. Thanks. I didn't realize how black-and-white it all is."
A zebra. Sometimes it's just like the smile on a piano*.
As for the Insty-toot Cato-caco-jack-o-ffering: fart too eas(il)y...
" "juliansimon.com."
Ahhhhh, the (n)ever-so-corny Cornucopians! Cornering the market place on where you've painted yourself into a corner of "new" "ideas"... with scar quotes, saggy, sun-damaged. Eye yey yey! How Corny! Ahhhhlways tooting your own Horn, of unicourse. I used to auto-toot ("speak" syn-gas flatulandish) too, when I was "Otto Toot" after I was before I was "Billy Libby".
What's left?
Escape velocity
Phfhphfhbhphppphhht*!
juliansimon.com."
Cacography. Coco-caca-cacophony, the sound of snorting something feel-good up one's nose, directly into one's brain, directly up one's ass. Corporate person as Psychopath by legal mandate,
.
.
*ag Asstronomical term. 5 + 7 = Zodiac.
Tim:
If this thread is dead, I'm sorry I took too long to reply.
I mean exactly that, in terms of pure "self interest" economics.
Example:
10% mortgage rate / 10% inflation (using sample numbers, simple math- this is not 100% accurate, but it shows my point)
Option A:
Buy a $250,000 house on credit with $0 down.
Cost: 10% * 250,000= $25,000 to be paid in interest in Year 1
Option B:
Save $250,000 in cash for one year; plan to buy house with cash one year later
Cost: $250,000 - 10% inflation= $25,000 in lost asset value
In practice, I don't lose $25,000 with option B, however, I must pay $25,000 MORE next year, so the net effect is the same.
With option A, I take possession of the house immediately, and take a tax credit on my interest payments.
With option B, I take much longer than one year to save up the purchase price, and the purchasing power of those dollar decreases as if they were being "taxed" or "charged interest". As prices go up, the net effect remains the same. Major difference: I can't claim this depreciation on my taxes, unlike another asset, like land.
This is exactly the thinking behind the bubble. However- and this is the scary part- it is perfectly rational.
Run an amortization of mortgage payments from 1990-2008, and compare that to the depreciation of a comparable amount of cash during the same time. With rates so low, it was economically disadvantageous to use cash. Buyers were acting in their fiscal best interests, according to the best data available at the time: (inflation is growing steadily, interest rate are rock-bottom).
So long as rates are low, and inflation is growing, this game will continue ad naseum- UNTIL the breaking point is reached, and people can no longer afford the new inflated prices. We hit this point in early 2006.
So long as we use FIAT currency, we will remain victims to the Federal Reserve/Debt machine. They will drop rates to encourage economic growth, and attempt to stave-off major inflation with occasional bumps. Problem is, we are now so far down this road that each "bump" becomes increasingly dangerous.
Before any of this Paulian logic will make any sense, you must understand how goofy this Federal Reserve system is.
In a nutshell, the Fed creates money by issuing treasury bonds, which are bought by investors because they yield interest.
Consider this for a moment.
All of the "new money" created is actually a debt- we now "owe" whoever bought the bond.
We are paying interest for the right to use our own money.
This sounds insane. I know. That is because this IS insane.
A far more rational system is one whereby the government simply creates the money directly, and spends it into the economy proportionate with productivity. For example, "Colonial Script" which was used in the USA prior to the Revolution. This system can compensate needed fluctuations in money supply, however, when kept in balance with production, it avoids inflation.
This is actually a SUPREME irony. As a libertarian, I STRONGLY ADVOCATE that we completely NATIONALIZE our currency. Paying interest on our own money is simply insane, leads to rampant inflation, out of control spending (on the military and elsewhere) and a whole plethora of other problems.
To borrow a phrase: we must strike the root! The Federal reserve IS the root.
JoAnn:
I prefer tinfoil. When I wear turbans, my right-wing neighbors give me dirty looks.
CORRECTION:
Above I said:
"So long as we use FIAT currency..."
I meant to say:
"So long as we use debt-based money..."
Colonial Script was actually a FIAT currency. I disagree with Ron Paul on the gold standard issue, however, he is dead-on correct about the Federal Reserve.
JoAnn:
My 3% example got a laugh from you, which was not my intent.
Here is a far better example:
Housing inflation, Brevard, Florida, 2000-2006 was about 11% per year.
Mortgage rates were at about 6-8% for people with good to decent credit.
This means that I would net 3% per year by financing 100% of a house at 8% while inflation stood at 11%. This is why a lot of Americans took "home equity" loans to invest in stocks, even though that was outright insanity in retrospect.
The Federal Reserve (I allege deliberately) gamed the system so that it "made sense" to leverage your house to the hilt and flip four others. We cannot blame people for acting in their self interest; we must evaluate how these conditions came to be.
You've got some facts wrong Zap.
First, you cannot depreciate land. You can try, but the IRS will catch you eventually.
Second, the Fed does not create money by issuing Treasury bonds. The Treasury issues the bonds. The Fed 'creates' money by purchasing the bonds on the open market (among other ways). If the Fed were to issue bonds and sell them on the open market like you are saying, the effect would be to take money out of the system, not create it.
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