The mortgage...

Or they might even start to buy things that aren't Treasuries.

Most of the loans we're familiar with in our personal

Let's say it's um let's say its 10 billion of commercial mortgages.

why.

And that caused housing prices to go up.

So let's think about how we manage our money.

So right here are a whole bunch of people's mortgages.

Well I have the original mortgage on my house.

This is really the tip of the iceberg.

We would pump more and more money into Fannie and Freddie Mac.

I suffered from my mortgage loan.

I am right now thirty four years old and

So, each of these is an investor.

Now what are my liabilities?

Right?

It's only worth 100,000 now.

Let's say I'm some type of the Investment Bank.

We all have heard of it.

Well everyone knows that it's not going to be exactly 10 .

Remaining mortgage on the home, 1 07,000.

So I'll just draw it down here.

You're assuming interest only loans.

Your address in Brooklyn, the payments on your mortgage, how long you've been a member of the NYPD.

You'll sell the house and you'll pay it off, even though you can't pay the mortgage anymore.

But Countrywide would say, well, we're already giving mortgages to all the people who qualify.

And let's say on that house unfortunately, I don't own it outright.

So it's not just a promise to get money.

Because housing prices been going up.

Can I go out there and I buy a whole bunch of mortgages.

What does it mean, derivative?

But for the simplicity of this argument,

Do you own outright, do you have a mortgage?

They sell it to Bear Stearns.

They just couldn't get up to 15,000 in savings.

And when they default, what is kind of the recovery?

We would lower standards on what it took to get a mortgage.

Imran's no dummy, so he does the same thing. He raises his price to 2.

So times a million, right?

We even bought our old house, assuming that we'd never have to pay the mortgage in full.

And why does that matter?

So let's say I have another group of assets.

I paid off the mortgage when I got my promotion.

So then even more money flowed in.

Why were they willing to pay rent, when they could have bought a house, where the mortgage would have been interest plus a little principal it would have been no more than 400 a month?