Creating money

[Lancer]

AAAARRRGGGG!

A mortgage is NOT a debt to a bank. It CAN BE a debt to a bank, but doesn't have to be. A mortgage IS a debt to a creditor. In my example, I'm the creditor.

Are you guys screwing around or what? Someone please...

GET IT.

[Lancer]

Stefu, if you happen this way, we need a ripping hair out smiley.

[Skanky Burns]

If you are the creditor, then why would you be able to sell the house? Wouldn't that be the creditee's?

[Imran Siddiqui]

A mortgage IS a debt to a creditor. In my example, I'm the creditor.

So how in the HELL did you create money by selling it? You didn't create a dime! The guy paid you for the mortgage, and then mortgagee has to pay the guy. Where does this 'new' money come from?

[Sava]

Originally posted by Imran Siddiqui
So how in the HELL did you create money by selling it? You didn't create a dime! The guy paid you for the mortgage, and then mortgagee has to pay the guy. Where does this 'new' money come from?

I'm too frustrated to continue with this... Lancer doesn't get it.

[Imran Siddiqui]

If he sold a mortgage for $100,000 for the price of $100,000, then the mortgagee has to pay the guy he sold it to the $100,000. So instead of going from A -> B, it goes A -> C -> B. There is no creation here.

[Lancer]

Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

[Sava]

Originally posted by Imran Siddiqui
If he sold a mortgage for $100,000 for the price of $100,000, then the mortgagee has to pay the guy he sold it to the $100,000. So instead of going from A -> B, it goes A -> C -> B. There is no creation here.

I think the monkeys are slowly turning the wheel

[Sava]

Originally posted by Lancer
Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

apparantly the wheels are spinning, but the train is going nowhere

[Lancer]

I'm a tad peckish.

[Imran Siddiqui]

Well that's what I'm asking. There's one house worth $100,000. I sell it. The guy that buys it pays me a mortgage. I sell the mortgage to a third party. He pays me, but there's still a mortgage... He could turn around and sell it yet again. The new buyer of the mortgage could do the same. It could happen many times, each person walking away with whatever they sold the mortgage for, but still, there is only one house...

What? How is this creating money? The $100,000 is just being paid from person to person... it isn't increasing or decreasing. You sell it to B, who sells it to C, who sells it to D... where is this extra money coming from?

[Lancer]

Why, the buyer, of course.

[Sava]

If the guy buys the house outright (giving you $100,000), why is he paying you a mortgage? If he mortgages the house after he buys it, that just means you are giving him $100,000 and he's paying you back. If you sell that debt, the person buying it would pay you the remaining principle, plus, perhaps, a fee. But that fee wouldn't be larger than the amount of interest that would ultimately be paid. You wouldn't be creating an extra $100,000, your profit would be the added "fee".

[Imran Siddiqui]

How is the buyer getting any extra money? He pays you $100,000 for the mortgage, yeah? So he's -$100,000 now, right? So when the mortgagee pays the buyer, he is just getting his $100,000 back!

The only way the buyer is making money is on the interest of the mortgage. But that isn't creating money, because the mortgagee had to pay that anyway.

[Lancer]

He's not buying it outright, he's paying me a mortgage. The next guy buys the mortgage outright...He puts the value of the house in my ready fingers, and now he holds the mortgage.

I'm thinking about going out for Chinese food and a beer.