Recently, government of the US announced 300 billion injection of money for moribund real estate market in the country. As a Toronto condos realtor I believe this is an important event for every realtor in the world to think about it. But not only for realtors. Every citizen, especially in the USA, should stop for a while and think: "Is my goverment really doing a right step?"

For many affected people this news can sound as a gift from heaven. They are threatened by the risk of losing their homes, they are no longer able to pay for mortgage and suddenly - there are money from the goverment to help!

But there are two questions: "What's the source of money?" and "What will be the effect?"

There are actually three possible sources. First (and the most propable) is cutting some other expenses and redirecting the money. Ok, but where to cut? Health care? Education? Army?? The second option - US can borrow some money from abroad - so actually it means transfering debt to citizens. Or the third way - just printing "some more" money. Sounds good, but even a small kid knows this is a route to (economic) hell. Just take a look at Zimbabwe!

And now about consequences. The goverment's aim is to loan money to people, who are unable to pay for their mortgage. So they will take another loan, the get out of the first loan. So this means 300 billions will be transferred to banks and people will be still in debts. Yes, the goverment can pardon payments. But that would just encourage more wild borrowing in the future and the problem would by even worse in some time....

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