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

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

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

And that caused housing prices to go up.

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

Well I have the original mortgage on my house.

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

why.

I've essentially become the lender to the home owner, and so the home owner's morgage payment will now come to me the Investment Bank .

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

I suffered from my mortgage loan.

It's only worth 100,000 now.

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

We all have heard of it.

You're talking about 0.5 per month.

I'm thinking about people's jobs, about their mortgages and pensions and their college funds for their kids.

You're assuming interest only loans.

So, each of these is an investor.

So then even more money flowed in.

Deception can cost billions.

So I want to funnel more and more money in here.

This is really the tip of the iceberg.

What does it mean, derivative?

But for the simplicity of this argument,

Remaining mortgage on the home, 1 07,000.

Because housing prices been going up.

I am right now thirty four years old and

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

What I want to do in this video is go over the math behind a mortgage loan.

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

Now what are my liabilities?

Right?

And why does that matter?

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

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

I paid off the mortgage when I got my promotion.

But there wasn't actual aggregate savings going on.

So I stick them all inside of that.

They sell it to Bear Stearns.

But maybe that's not enough. Maybe the economy is still tanking.

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

Well equity is nothing but, if I have an asset that's worth 1.5 million, and I owe 750,000 that was my original mortgage on that asset then what I'm left with is the equity.

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