patrick.net

Texas, the prices didn't go bonkers. The structure of the economy is better there for first time home buyers. I would be interested to do more work on Utah because I know they have their no homeless in state plan which actual takes supply of the market and firm prices. However, I have never done internal data work for Utah

It seems to me that Calif has done everything possible to prevent job growth where as some states have abstained from indulging in such activities.

Pretty good interview. One question Where is the data showing that the jobs recovered have been low wage jobs? I keep hearing this thrown around but I haven't seen any evidence though I suspect that there's some politics involved.

Just 10 states will account for more than half of total U.S. employment growth this year, largely because they're all big-population states. With a large base, it doesn't take the fastest rate of growth to rack up big gains, and nine of the 10 states on the biggest-gainers list also rank in the top 10 for population size.
Read more at http://www.kiplinger.com/slideshow/business/T012-S001-10-states-adding-the-most-net-jobs-in-2012/index.html#y4tYbdpf5BmY7QDW.99

Not to mention that it does not speak to the quality of the jobs.

Once again your graphs don't mean much

toothfairy says

One question Where is the data showing that the jobs recovered have been low wage jobs? I keep hearing this thrown around but I haven't seen any evidence though I suspect that there's some politics involved.

The U.S. government BLS site and even the ADP has monthly breakdown on each sector in terms of job creation. In this cycle the majority them have been going to theservice sector which isn't surprising when you think of an economy that is 68%-72% on consumption

Here is the data from the last report for both BLS and ADP this where the data comes from to answer your question

She asked what if there's a stronger job market and you basically said that it doesn't matter because the jobs recovered so far have been low wage. Still not seeing the evidence...

I suspect that's why they were trying to usher you off at the end :D

toothfairy says

I suspect that's why they were trying to usher you off at the end :D

Well, the problem with just using jobs is that we have gained all the jobs lost from the private sector that we lost from the Great recession, but where are the mortgage buyers?

Simple answer is that low wage paying jobs or min wage paying jobs don't have the actual incomes "base salary component" to have the ability to buy a home.

This is why mortgage buyers have been 20%-25% below trend for years now even when rates were at 3.25% and prices back at 2012 levels.

So, once interest rates rose. The second of housing inflation came to the system. This is why we have seen a down turn in demand from mortgage buyers from 2013 levels which actually wasn't a very high bar to beat.

This always goes back to my core thesis. We simply don't have enough qualified home buyers in America. Being in the business we get to see first hand for me it's been 14 years the actual DTI and LTI capacity of Americans to own the debt. If you take out the cash buyers and the rich mortgage buyers, there simply isn't enough income power to have the capacity to own the debt of housing like we have had in other cycle.

Which goes back to my affordability model thesis. The entire index is flawed because it assumes that every American has 20% down to buy a home.

So let's say 5 million jobs were created in the next 2 years. If a majority of them are low wage paying jobs that's not going to create the income demand that people expected.

I look at the data each month, One bullish sign is that we are getting a better profile now than we did in 2012-2013 in terms of better paying jobs.

However, there simply isn't enough actual income demand even with rates being below 5% since 2011 to have increased the mortgage buyer profile. This is the main reason why existing home sales are going to be negative in 2014

Connecting the dot game to match the DTI and LTI abilities of main street America

s o

The fact is that jobs are created by investment, period.

Investment has moved into playing arbitrage, interest on excess reserves, and real estate but not small business as it has been made too risky by government meddling.

People act like this is such a mystery when it is not at all.

The CRA and the spread of risky loans to private label were the worst for individuals, especially after the lack of diligence in lending as the prices rose ponzarily.

What would the US economy have been like, if we instead of encouraging easy money for homes, spent the 5-7 Trillion lost on Manufacturing tax breaks, free tuition for Sciences, and caps on Lawyer fees to $250B/year?

Do you have data from the 90's to see what happened after the last housing crash? I don't think its any different this time just a longer recovery.

toothfairy says

Do you have data from the 90's to see what happened after the last housing crash? I don't think its any different this time just a longer recovery.

Rule of thumb for me always is that if you're comparing economic cycles you need to use the data wisely, because it makes this recovery look really bad.

We came off the worst household debt leverage bubble post WWII and it impacts that how a recovery will look like. I will have some charts later. Here is one source to look at until I get back. Our 24 year cat passed away last night and dealing with the family drama of that

University of Chicago Booth professors and I have been communicating on the data we have been seeing on the Housing market the recovery. I am most likely at least hoping that I can speak at the L.A. conference this year in June, as I was to speak to faculty last year

Here is a look at the housing recovery with this cycle and a video of last year

http://fivethirtyeight.com/features/why-the-housing-bubble-tanked-the-economy-and-the-tech-bubble-didnt/

https://www.youtube.com/watch?v=ns4bxXfqOow

Just like the great depression the damage was caused previously to 2007.

The article cites Pikkety who has this whole subject Wrong.

The problem just like with the great depression is the government meddling after the recession, in feeble attempts to fix.

If there was no bailout there would have been no problem and we would see a real recovery that produced people who could buy homes.

To further exacerbate the problem the dumb ass in charge coerced Obama care upon the economy.

And he empowered Americas favorite gay Barney Franks to fix the very problem that he and Dodd created. Ironic to be sure but certainly not funny.

Here in Calif we now have cap and trade and pushing it into the 5 worst states to do business in.

Logan Mohtashami says

https://www.youtube.com/watch?v=ns4bxXfqOow

He didn't say there's not a recovery in wages. He said there's no recovery in spending driven by housing prices.
And that you need to get more wealth into the hands of the spenders. I agree with him 100%.

That doesn't mean low wage jobs, actually the opposite. So I don't see how it relates to what you were saying.

It's not the doomsday scenario you're making it out to be. More like a roadmap for what to expect from policy makers.

toothfairy says

And that you need to get more wealth into the hands of the spenders. I agree with him 100%.

Professor Sufi and I are strict believers that the wealth effect model isn't as good as many have forecasted. Trickle down economics would actual means wage growth would trickle down and people would be able to make more money to buy good not have an economy where we are in month 59 of expansion and the saving rate has collapsed in this country again to a low point to where we need to re leveraged debt higher. First red flag we saw and it came in Quarter 4 of 2013

toothfairy says

That doesn't mean low wage jobs, actually the opposite. So I don't see how it relates to what you were saying.

The last article I wrote stating the 5 reasons and 3 charts to show why the housing bulls were wrong about demand in 2014 was a perfect example .

You yourself weren't even aware that the job recovery cycle we have had... the actual data that the government has provided each month for years was primarily led by a low wage job cycle. I can understand if you don't follow the economic data each jobs report or chart of each report when it comes up.

However, look at your reason
toothfairy says

I keep hearing this thrown around but I haven't seen any evidence though I suspect that there's some politics involved.

I understand if you don't believe President Obama's administration giving the numbers each month on the low wage job cycle recovery. However, I can't accuse the government BLS site of lying each month for years on the actual job created in each sector, that is hard conspiracy theory against the Obama administration

So, trust me when I say this President Obama and BLS data site isn't lying to you. The majority of jobs recovered in this cycle have been low wage. You can look up the data you like on the government web site itself http://www.bls.gov/.

I understand if you don't trust the government data but that is as good as it gets and it matches the ADP data for years now. So you have 2 different job sites that have been giving the information in the same manner

toothfairy says

t's not the doomsday scenario you're making it out to be

When you say doomsday what actual thesis are you talking about?

What my thesis was roots back to my May 7th , 2013 article. When everyone said there is pent up demand and growth for years. I challenged that thesis and said once housing inflation rising on both front that will impact DTI and LTI models ... that should be what you should be worried about

So, for 2014 a lot economist and housing pundits had 5.5-5.8 million home sales for EHS because of all the pent up demand and inventory was coming on line more. Plus , 5.09 million considering 34 million Americans have been added since 2000 was a low level of sales and had major upside

Well, again as the previous article I wrote stated. If you read the internal data, the demand was driven by article inputs. Items that don't have long term sustainability. So, instead of showing growth for 2014, we are going to have a negative year over year number in sales.

Also, this while inventory is higher and rates at 4.25%-4.5% with 33-35% cash buyer still in system which is 23%-25% above normal historical trend. That is the internal data that has been missing by the housing pundits. Trend for total sales right now going in a range of 4.68 million -4.93 million which means we will the first negative year over year sales number in this cycle while rates are under 5%

So, I ask you this question because I ask housing bulls this very question.

how can it possible be that we have a negative growth year in sales with inventory higher from last year and rates staying between 4.25%-4.5%

These are my reasons and charts why. As always, math, facts and data wins out

There are 5 simple and obvious reasons why the financial media and housing pundits got it wrong in terms of demand for home purchasing and year over year growth in existing home sales in 2014.

Lending standards are not too strict

First, since none of these pundits have any financial lending experience they all naturally assumed that lending standards would ease making demand grow. It was painful to watch Steve Liesman on CNBC try to make a case to Diana Olick that if lending standards eased it would stimulate demand. Sadly, this is a misconception held many in the financial media and Wall Street firms. Mortgage standards are not overly rigorous in America. In fact, all you need to buy a home in America is a 620 fico score, 3.5% down payment and a debt to income ratio of not greater than 43%. Once this is recognized, the real problem, no wage growth and the lack of good paying jobs, will become the focus of how to grow the housing market.

Housing internals are weak

Second, those housing pundits tend not to consider the “internals” of the housing market. The internals tell the story for those who care to look.

In a normal cycle we would see the following:
90% mortgage buyers
40% of that first time home buyers
10% cash buyers

In this cycle, however we see the following:

67-70% mortgage buyers
27-30% first time home buyer
30% plus cash buyers for the past several years

The internals show weakness in demand, not strength. What if the number of cash buyers returned to a normal 10% level of the market place? 2014 has a high percentage of cash buyers but the volume of sales are going down. With a lower percentage of cash buyers expected in the future, the number of mortgage buyers will need to increase just to maintain the current level of sales.

Too many low paying jobs

Also consider that this economic cycle has had a very weak income jobs recovery profile. In layman’s terms this means that the majority of the jobs recovered have been low wage jobs going to people 50 and over. The Debt-to-Income (DTI) and Liability-To-Income (LTI) metrics for home buyers are still high even though interest rates are low because wages are low and savings have been exhausted - hence the very soft demand for mortgages. The affordability index used by most of the financial media and Wall Street firms are terribly flawed because they assume everyone in America can make a 20% down payment. These days only the rich can come up with a 20% down-payment. In my business I am also seeing signs of economic stress in the would-be move up buyers. Many homes may no longer be underwater but the amount of equity is still generally small so there are fewer dollars available for the next purchase.

Home prices are too damn high!

The term “housing recovery” suggests that home prices are now “returning to normal”. In truth however, prices are rising beyond economic reality of most Americans. While home owners and housing pundits alike were glad to see the return of home values to nearly pre-recession levels in some areas, nary a thought was given to how to how this would impact demand. Prices were up 15%-45% in 2 years – the biggest 2 year expansion we have seen outside the bubble years. While we are seeing some price reductions, there really isn’t any meaningful way to get a price correction in the market until inventories increase or there is another a job loss recession. One of the best things that could happen to the housing market would be a major cooling of prices from the crazy pace we have been seeing in the past 2 years. Nevertheless, I expect home prices will continue to show growth for 2014.

5. New home sales only account for 10% of the market

For years I have been saying that housing starts and sales will rise in the new home sale sector because the 80% correction it had in this cycle. And while this is true, new homes are only 1/10th of all home sales and tend to be for the more wealthy buyer. Housing inflation for new homes sales is well over the peak of the 2006 bubble in terms of median income to median prices. Growth in that sector is being carried by the wealthy. For the less wealthy home buyer, builders are competing with traditional (resale) homes which often provide a much better value. Therefore significant growth in the new home sector will be limited.

In short the housing bulls didn’t have the sophistication to know why things were soft; In a “real” housing recovery housing demand would grow by demand from main street America and mortgage buyers not from cash buyers. Even with mortgage rates below 5% since early 2011, zero interest rate policy by the Fed, and cash buyers being 30-35% of the homes bought, we are still going to finish 2014 as a negative year over year in home sales.

So to all the housing bulls who still believe there is growth coming in 2014, I ask you what kind of Housing Nirvana are you smoking. This doesn’t mean a housing collapse but also doesn’t mean growth in the housing sector for main street America. The only growth left this year are in new home sales and that is being held up by the wealthy buyers, not first time home buyers. Once main street America gets paid, then you will see a real recovery in housing.

http://confoundedinterest.wordpress.com/2014/04/22/existing-home-sales-fell-0-2-all-cash-buyers-33-fhfa-home-prices-rise-0-6-in-feb/

Mind that this number will get less worse YOY as the high comps May 1 and before are over with so looking for a trend month or week where we break even and see where we can work from. This will be the best way to see if we are going to have back to back negative years from the 2013 levels in sales. Some bulls have predicted we would have back to back negative years but I need more data to confirm

Good Post, but you leave out how jobs get created.

We're still at the bottom in terms of the current cycle. House prices rose faster than incomes. That's not bearish what it says to me it says that incomes will rise next.
Even from your own chart you can see back in 08 the decline in home prices led the decline in incomes. But your charts are so small it makes it hard to see the bigger picture.

Logan Mohtashami says

in a normal cycle we would see the following:

90% mortgage buyers

40% of that first time home buyers

10% cash buyers

This is the problem I have basically everything you say is based on this idea that the economy is supposed to be humming along at full employment right now when clearly it's not. You're the only one saying that, not the bulls.

toothfairy says

This is the problem I have basically everything you say is based on this idea that the economy is supposed to be humming along at full employment right now when clearly it's not. You're the only one saying that, not the bulls.

Full employment?

I don't believe the full employment theory I have ever used in my life in regards to housing . Full employment to me is almost an economic anomaly

We look at the past 2 economic cycle, peak employment was at the height of the last 2 financial bubbles.

The quality of jobs and the incomes they provide are more important to housing than full employment. Let me give you an example.

CAR ( California Association of Realtors)
Just came out last week with a statement that 67% if the entire state of California is priced out of the housing market.

I believe it's more 82% with a different model. However, taking the 15% gap out of the equation. If California created more jobs does that necessarily mean those jobs would provide enough income to buy homes.

After tax/expense of majority of Americans just isn't good enough to obtain the debt of housing.

I admit my buyer profile are better off that most Americans, but even they know, the move up buyers with good incomes are hitting what I call " financial stress points' in which they have to put more income and assets into the equation to meet their desire PITI level.

That is what I saw with first time home buyers 2 years ago and now it has moved to move up buyers.

If we get wage growth running at 2.7%-3.3% on a consistent level that is one thing but wage growth has really gone no where, off from the bottom but nothing to be proud about yet. I believe wage growth is a 2015 story.

However, I am trying to connect the dots because maybe I am not speaking to you. However, if you look at the housing pundits that I speak off. They're all puzzled why Americans aren't buying homes and at least what I am bringing to the table in terms an explanation is that. It's not about jobs any more, it's about better paying jobs and wage growth and this point of the cycle because now we have housing inflation running at both fronts

Secretary of Hud " We are at the biggest housing affordability crisis in our lifetime" Now he is talking about rent, which rent inflation is at the highest point of this cycle.

Americans are getting hit on both sides of the spectrum now. Now if wages pick up that can contain the DTI and LTI pain but at 2% wage growth with base salaries where they are at... it's a problem

That is the point I am trying to make. I am giving the reasons why sales are going to negative this year.

New homes sales,starts and permits will growth YOY come at the end of 2014. However, that is a smaller market place and more tilted for the wealthy

In fact by the end of the year the charts and data will show positive YOY comps for new home sales and negative comps for existing home sales

Globalization
Technology
Debt
Demographics

These 4 have their hand prints on this economic cycle and why many Americans are complaining about wages

Goldman just cut their housing forecast

http://www.businessinsider.com/goldman-cuts-housing-forecast-2014-5

However, as always their core thesis is wrong and this is why they are lagging in their calls.

Lagging in their calls? You've been bearish on housing for 3 years. Is this the victory lap?

After all the noise you've been making estimates were finally cut from 13% to 12.5%.

?

And what is your prediction going forward?

toothfairy says

lagging in their calls? You've been bearish on housing for 3 years. Is this the victory lap?

My thesis since 2010 has been 1

We simply don't have enough qualified home buyers in America ( X cash buyers) out of the equation

Pricing changed in 2012, once inventory levels got below 6 months that gave leverage to the upside and there there is still upside for prices.

However, demand is showing stress.

I look at housing from an economical standpoint, not an investment standpoint.

In time I knew the data would reflect this once housing inflation rose on both fronts. That happened in the start of May 2013.

Now the channel time line is where are sales going

Do we see back to back negative years for sales from 2013 level. As of now I would yes, need more data and time .... but we might be a range of 4.7 million - 5.4 million for along time because soon the Fed will raise rates. At that point 12-18 months after the fact we might see the first level line of recessionary numbers which the earliest timeline for me at least is 2017.

However, data is always important, as has to be looked at daily and monthly.

When I tell people the YOY numbers are going to look less bad and we will see a positive line at some point that reflects the full 1 year cycle where housing took a negative turn and YOY numbers will show a final line where we can base our numbers for 2015.

That's the next step. Too see if we do get back to back negative years in sales from 2013 levels

If wage growth picks up and Americans get paid higher base salaries then a lot of the concerns I would have about housing would be less. However, what we have seen is massive price inflation and very weak wage growth.

The rich will always be able to buy homes cash and mortgages but main street America just simply doesn't have the income growth to keep up with home prices and rates.

Incomes and assets are crucial for housing much more than rates

We have gone from 18% to 3.25% on rates and yet we see all this buyer stress at a 3.25%-4.25% level... it's because wages didn't keep pace

you've definitely done your homework and I think you may be on to something.

Do you think houses were affordable maybe 2 years ago? What do you make of the fact that as soon as prices became affordable the cash started rolling in and drove back up the price?

I don't think the FED is going to raise rates anytime soon as that would clearly expose the FED influence for the charade that it is.

Jobs are going to start coming back to the US because China is being forced to revalue the Yuan.

Germany is as old as Japan that will also have an influence on international trade.

Because of demographics and technology there are deflationary pressures that have kept inflation away except with the malinvestments in the stockmarket and real estate.

This has bifurcated American citizens.

The reality is that the economy has not been allowed to grow organically which has caused the affects you describe.

One way or another the market Has to clear in order recover. The FED has caused ever increasingly large bubbles since the early 70s. At some point some say now some say in 2030 the market will clear in this country and housing is going to go what the buyers can afford which will be dramatically less than now because of the natural deflation that the FED has tried so hard to prevent.

Deflation is not a bad thing as prices will come down and wages will stay at the new normal level. This is a win for workers and a lose for investors. As the investors have had a unfair inorganic growth in the value of their investments through inflation.

toothfairy says

Do you think houses were affordable maybe 2 years ago? What do you make of the fact that as soon as prices became affordable the cash started rolling in and drove back up the price?

2012 was the lowest housing inflation point we have seen in this cycle and we will probably see in a while

What was the action back in 2012

- Low % of mortgage buyers
- Low % of first time home buyers, but better than what is today.
- Strong cash buyers, 30% plus with higher volumes for the year

In the lowest housing inflation point, you had a better first time home buyer profile but mortgage buyer % was weak. Total sales rose but it was a the cash buy that was very strong

I remember seeing in 2012 that the first time home buyer was seeing stress. They were qualifying for these homes but with rates at 3.25%-3.75% it was tough to get them in. However, they did but said to myself if rates and prices rise this market will be hit

Now 2012, was a huge drop in inventory, I had been expecting 8% YOY drop not 20% which allowed inventory levels to break to low point which we saw in December 2012/ Jan 2013 . With that back drop, cash buyers and low rates, the inflation story took off

toothfairy says

Do you think houses were affordable maybe 2 years ago? What do you make of the fact that as soon as prices became affordable the cash started rolling in and drove back up the price?

When I see those 2012 buyers now and where prices and rates are at. I would say roughly 40% of the buyers in 2012 wouldn't qualify or wouldn't buy the home as the total payment for the same home would be too high

It's not just a DTI or down payment factor it's also a LTI factor as well

We have not gained back the jobs lost since 2008.

The labor participation rate is low today. There are 92 million people out of the workforce, and 9 million+ officially unemployed=100 million not getting a mortgage.

The meager job additions have not even kept up with the population growth. In relative terms therefore, there is worse employment today than in 2008.

People usually pay mortgages with wages.

Houses did OK in Texas because Texas hasn't lost as many jobs as other states. They have 1. agricultural production 2. oil and gas production 3. high tech innovation 4. govt. defense equipment 5. NASA in Houston 6. oil refining 7. chemical production.

Notice I mentioned "production" often to emphasize where wealth comes from: production or innovation .

clambo says

We have not gained back the jobs lost since 2008

I love demographics charts, out of all the economic charts I have this set is always the best

5 main points with LP rates

1. Private sector jobs have recovery the numbers lost from the great recession

while the government jobs still has a negative handle

A lot state and local jobs has been destroyed as the fake revenue from the housing bubble set a lot state of local governments for massive failure
"assumption revenue calculation gone bad"

So adjusting to population ... this is a tad old on purpose we need something like this

Now here is where I think we have a false sense of actual jobs. Without a financial bubble component in the economy we simply don't have enough demand for jobs with our population. In hence we have create jobs out thin air to keep people employed to keep pace

So what is all the fuss about Labor Participation rates I mean for 30 years we knew this is coming and LP rates are going to fall

4 Reasons why 2000 was the peak of LP rates but the Great recession sped things up

1. Demographics - Easy many baby boomers retiring and many still working because they can't retire and yes you can have both in a cycle

2. Rise of disability. If anyone has seen this chart you can see why some people are out of the workforce.

3. People going back to school. Matching the parabolic rise in student loan debt, many Americans went back to school due to the great recession

4. People left the work force

So what does this mean.. we are *(&^ing old

-since-2000-25-64-and-65plus.gif' width="600" height="437">

Another problem with demographics.

We will have an older workforce for decades to come as each decade will have less people be able to retire, thus working longer.

What we have seen this cycle as the charts above show that the old are taking in the jobs and the young are paying for it.

This covers the subject nicely:

http://globaleconomicanalysis.blogspot.com/2014/05/labor-force-employment-and-population.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

indigenous says

This covers the subject nicely:

Yes the old are here and going to stay around for decades to come, the curve doesn't turn until 2057. This why Medicare and S.S. payouts are going to explode for 40 years

Logan Mohtashami says

This why Medicare and S.S. payouts are going to explode for 40 years

I don't see how the math can work?

Question that arises is that since funny money from investors is leaving housing market, are there any chances that money will flow into economy and help boost the economy?

bubblesitter says

Question that arises is that since funny money from investors is leaving housing market, are there any chances that money will flow into economy and help boost the economy?

The link and what Logan indicates is that we do not have a real recovery.

What is required is that the market clear. Once this happens and it will happen one way or another real prices will then be established on what people can really afford.

The FED is going to do everything it can to keep the economy floating until somehow the QEs stimulate real growth. Since we are in the 7th year of this I submit that it is not going to happen. And that demographics will be the final nail in the coffin for the FED.

indigenous says

I don't see how the math can work?

It's not going work, we have the accept the fact that we are going to be borrowing money for 40 straight. I run a lot budget numbers and because of demographics after year 2022 the light are out as by 2024-2027 all mandatory payouts will eat up government revenue even at a 3% GDP rate which means the rest is borrowed.

Logan Mohtashami says

after year 2022 the light are out as by 2024-2027

Not sure I understand correctly. 2022 is the beginning of Apocalypse or is it 2024? or is it something else?

Question now is will 2015 be a negative year in terms of sales from 2013 levels

bubblesitter says

Not sure I understand correctly. 2022 is the beginning of Apocalypse or is it 2024? or is it something else?

We will be borrowing money non stop, we have better debt profiles than Japan and England they have been broke much longer than us and they still borrower money at cheap rates.

Just for budget sense after 2022 the math makes it impossible have any yearly surplus so the debt on debt adds up from that point on

Logan Mohtashami says

It's not going work, we have the accept the fact that we are going to be borrowing money for 40 straight. I run a lot budget numbers and because of demographics after year 2022 the light are out as by 2024-2027 all mandatory payouts will eat up government revenue even at a 3% GDP rate which means the rest is borrowed.

From what I read it will be 2030. But I don't think borrowing is going to work as just the debt service is now at 300 billion if interest rates go up to historic norms that turns into a trillion right quick. At that point life as we know it changes. The FED is walking a fine line as if they keep the interest rates low run away inflation comes back.

One fear is that they will use war as a way out of this.

On the positive side the US is projected to have a population of 430 million people. This will improve the demographic numbers quite a bit.

When the apocalypse occurs the FED will be no longer be able to create inflation. At this point there will be a market clearing, so real growth can finally occur. Hopefully people will learn from this. And life will be better for all but the upper echelon.

Logan Mohtashami says

debt on debt adds up from that point on

What does that mean for middle class?