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.

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

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

why.

And that caused housing prices to go up.

Well I have the original mortgage on my house.

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

I suffered from my mortgage loan.

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 .

Deception can cost billions.

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

This is really the tip of the iceberg.

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 .

And we said it has these assets.

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.

What does it mean, derivative?

Now what are my liabilities?

But for the simplicity of this argument,

Right?

Remaining mortgage on the home, 1 07,000.

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

I am right now thirty four years old and

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

Those are essentially derivative securities that are derived from mortgage backed securities.

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.

But there wasn't actual aggregate savings going on.

And they designed it from the perspective of customers like Jane herself, insisting on responsibility and accountability.

You can actually do this type of a structure with any type of debt obligation that's backed by assets.

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.

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.