Page 207 - THE PATH
P. 207
To make it clear, I would like to simplify and explain it so
that everyone can understand.
If the actual value of the house is $100,000, the bank
eventually increases its value because it allows a loan of
$300,000 for the same house. This has been done in a
sophisticated and planned way. How does this happen in
terms of figures?
For a loan of $100,000 with 12% interest, the monthly
instalment would be about $1,200.
For a loan of $300,000 with 6% interest, the monthly
instalment would be about $2,500.
The banking trick is very clear. Apparently 6% interest is
less than 12% , but monthly payment for the same house
is much higher.
The amount of money is not important for the bank (it has
been taken from funds and other sources with less
interest). What is important is that the monthly instalment
for the same house is higher than its actual value and thus
the profit is much higher.
Such an attitude has brought the banks in an unwanted
position.
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