May 25, 2024

No Mortgage Payments For A Year Would Stimulate Spending

Experts Predict Depression

Are we in a depression?  Jon Markman of MSN Money eloquently explains the world’s financial dilemma.

Too Late To Avoid A Depression? – MSN Money

Policymakers are quickly running out of time and room for error. And even a brilliant plan — which we haven’t seen yet — could fail without some good luck.

The problem is that the models often fail to accurately forecast human behavior, and politicians regularly screw it all up by ignoring the data and diverting funds to pet projects.

Over the past week, the world’s intellectual, business, government and philanthropic elite emerged from World Economic Forum meetings in Davos, Switzerland, with grim faces and warnings of financial doom.

Credible economic analysts now say there is still a narrow window of time in which policymakers in the United States, Europe and Asia can avoid a meltdown over the next year by immediately coordinating the injection of real financial adrenaline to banks, companies, households and local governments — not just rhetoric and indiscriminate spending. Yet that window is closing fast, and if the right steps are not taken soon it may be shut for years.

The Stimulus Money Could Pay Every One’s Mortgage Payment For A Year

The experts are predicting a possible depression and the economy needs major monetary stimulus.

The government could provide a massive shot of adrenaline to consumer spending by eliminating the consumer’s biggest monthly payment – the mortgage.  The one  trillion dollars that Congress wants to spend can cover the interest due on every residential mortgage in the country for a year.  Here’s ten reasons why the plan would work.

1.  According to the Federal Reserve, total home mortgage debt as of the second quarter of 2008 was $10.6 trillion.   Assuming an average interest rate of 6.5% the interest payments would only be $689 billion for one year.  Equivalent payments could  be made to homeowners without mortgages and renters.  The total cost would roughly equal the one trillion in stimulus spending that has been proposed by Congress.

2.  Eliminating the mortgage payment would allow consumers to strengthen their balance sheets by paying off some debt.

3.  Many consumers would effectively have a substantial pay increase since the average mortgage payment can easily consume up to 40% of gross monthly income.  It is inevitable that a significant part of the extra cash would be spent.  The increased spending would increase demand for goods and services and reduce further job losses.

4. The mortgage payment is the biggest monthly expense for most people.  Not having to pay the mortgage for a year would greatly boost consumer confidence.  Restored confidence could stimulate future spending after the one year mortgage holiday ends.

5.  Homeowners who are in arrears on their mortgages would be given an opportunity to catch up.

6.  The default problem for the banks would be temporarily eliminated since the mortgage payment would be made by the government.   Not having a mortgage payment for a year would strengthen the consumer’s finances thereby lessening the number of defaults after the mortgage holiday is over.

7.  The American consumer knows how to spend – he just does not have the money right now.  Give it to him and let it be spent with no strings attached.

8. Millions of individual consumers will spend or invest the money more wisely than bureaucrats in Washington.

9. Those homeowners who have lost their jobs and are now struggling to pay their mortgages will be given immediate financial relief.

10. This plan would allow renters to save their stimulus payments for a down payment on a home, thereby providing support to the housing market.

If the Congress wants to borrow one trillion dollars that the American taxpayer will eventually have to pay back, then put that money directly into our pockets with a Mortgage Holiday.    We do not need Congress to spend our money for us.


  1. I think this would be a great idea and the president then can have jobs for us all. I worked many years to have my home and now because of bad spending at the white house I might loss my house how unfair.

  2. sure if all you want are more people spending on TVs and vacations but what person would say, hey let’s rebuild a bridge? or other stuff the stimulus has in it?

  3. How To Stimulate Consumer Spending And Jumpstart The Economy

    My survey produced an interesting anomaly— several respondents felt that excessive consumer spending was the primary cause of the economic problems we face today, and that spending is not to be encouraged.

    But the root problem they were correctly speaking to is the source of the spending money, not the spending itself. Spending is essential for demand creation, and increasing demand is what produces jobs.

    So why we ask, does government remove the dollars from the economy before they accomplish the demand stimulus “thingie” (highly technical economics jargon)? Nearly half the survey responses observed that consumption taxes (The Fair Tax) are far more productive/creative than income taxes.

    The other half wants to replace the IRC (Internal Revenue Code) with a Flat Tax on all forms of income. Both suggestions are simple, and quantum leaps better than anything being seriously considered by congress— “seriously” being the operative word.

    A combination of the two— priceless, but later!

    The single, easiest, fastest, biggest, consumer-spending instant winner bonanza is not even a twinkle in an old politician’s eye— there are far too few new politicians. Replace the Social Security Retirement Program with a plain vanilla pension plan, pre-funded by smaller, mandated employee contributions.

    The current methodology is simple: it takes money out of our pockets (and our employers) puts it though governmental blenders, and spits out IOUs for a meager benefit at retirement. Why not let the private sector provide pension benefits to all employees under the direction of a trimmed down Social Security bureaucracy?

    How? By purchasing Social Security Retirement Income Annuities (SSRIAs). Google “A Capitalist’s Social Security Reform” for the nitty-gritty details, but here’s what we accomplish:

    We stimulate spending immediately by only withdrawing 3% of income from 300 million pockets and pocketbooks, and nothing from employer treasuries. We provide demand-push spending money and reduce demand for consumer credit.

    And, looking forward an article or two, we collect a tax on every dollar spent in the economy— except those for food, healthcare, and higher education; even from our friends and neighbors in the Underground and Internet economies.

    There are several other ideas on the more-spending-money-in-consumer-pockets agenda, and some thoughts about consumer confidence. It’s tough to be confident, for example, when you click the links between congress and business lobbyists.

    It’s tough to be confident when we see Wall Street control its regulators, constantly produce the same speculative garbage, and reward its senior employees and sales persons from the carcasses of mutilated shareholder-owners and “hostaged” taxpayers.

    These confidence destroyers can be dealt with, but first the rest of the story, on increasing consumer spending without credit abuse:

    One: Reduce the interest rate on all mortgages at least twenty-five basis points, and adjust monthly payments accordingly. The banks owe us, and will make-up the difference from increased business activity.

    For the rest of the article, please google the title.

    Steve Selengut
    sanserve (at)
    Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”

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