Podcast 20: Your Home Equity Belongs To The Government with Danny Ibrahim
Podcast 20: Your Home Equity Belongs To The Government
Everybody goes and says, “I built equity in my house. I bought this house". A year later, it's worth $400,000 more. Sure. So you ask them or her, “what did you do to the house?" What have you done to the house to make it worth $400,000 more?”
Who put that? Who put that money inside that house? The government, obviously the government, through quantitative easing. It's diluting money, making it worth less great inflation. Sure. And inflation. That house belongs to the government. That equity belongs to the government. If they want to take that money back, they're taking it back right now.
As we are in an environment where interest rates are rising the quickest in history, times are getting tougher economically for everyone and it's top of mind. What can we do in this scenario?
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Welcome to another edition of Broadway Table Talks. Today we got someone really famous here. No, I'm principal Broker. No, you're pretty good. Come on, you're really experienced in the industry. You got some big recognition. Principle broker, key rate, what else? Mortgage fund. Capital Owner. Yep. There you go.
It's private lending. Yep. What else can I say? Key Custom Loan Builder. Oh, I didn't say key, right? Key rate. Oh, there you go. Yeah. There you go. There you go. I love that. Danny Abraham, guys. All right. Well, welcome to podcast today. Let's talk about what's on everybody's minds since you're in the mortgage industry.
Let's talk about interest rates and where this world is headed. Yeah, I think we're, we're headed into a major, major crash earlier. Just kidding, just kidding. . There's gonna be, there's gonna be a phase next year. Where we're headed into a downturn that's inevitable. Like 2023. Yeah. 2023. That's gonna happen.
Yeah. Everybody should be mentally prepared for it. And financially prepared. It's very, very important. We've been telling all our clients to start saving money. Rates are gonna be continuing to rise all the way up to probably around June, and then we won't see anything come down until around November of 2020.
So that period with, especially with people that are in variable rate mortgages, they're gonna see an increase after the trigger rate will hit come December 7th. Everybody will be getting letters inside the mail the following week from their financial institutions and they're gonna be paying increased mortgage.
But you haven't seen amortization, stretching out though. Cause I, I'm hearing like 40 year amortizations, things like that. Right? Yeah. There's, there's one private lender right now that's offering private, I thought it was like a big five. No, no, it was private. That's offering 40. They're extending it out to 35 years.
There is, there is talk that the government and CMHC are gonna bring back the 30 year term for insured deals. Okay. They're already offering it on the commercial side with 50 year amortization. But the, yeah, there is talks that they're gonna bring back the 30 year program for the first time home buyers.
Next year is gonna be a very challenging time for everyone especially for first time home buyers, unless the government comes out with some new initiative new plans. The feds with CMHC and the Bank of Canada especially where they relax the. Relax the atmosphere with every single client base to tell the economy that it will be fine.
That's when we'll just see the markets just pick up. Everybody starts spending a little bit more and everybody starts currently buying, but that increased ation will really help with mortgages. But you don't think so? Why do you think the government has to do it? They don't. You don't think that financial institutions will come up with like, innovative products to, you know, like, I saw that three and a half.
That's, that's a really good. The government. I want to talk a little bit about this. Okay? Everybody goes and says, I built equity in my house. I bought this house. A year later, it's worth $400,000 more. Sure. So you ask them or her, what did you do to the house? What have you done to the house to make it worth $400,000 more, assuming nothing.
Nothing. Okay. Who put that? Who put that money inside that house? The government, obviously the government, through quantitative easing. It's diluting money, making it worth less great inflation. Sure. And inflation. That house belongs to the government. That equity belongs to the government. If they want to take that money back, they're taking it back right now.
Okay. Right. Makes a little sense. Right. It's true. So when they want to give it back, which will be in time, hopefully by the end of 2023, they will give it. Right. Cuz our economy is so much heavily dependent on housing that this is like what they're trying to do on purpose, right? Cause inflation's running wild and they want to bring out prices.
Right. You know? But like people still need a place to live in Canada and especially with the tough, like the very loose immigration policies, trying to get people in here to replace our aging workforce and all that kind of stuff. But they all need somewhere to live and there's no density, there's no nowhere they can build cuz zonings is so restrictive and all that kind of stuff.
Yeah. So what does that do? It just boosts up the rental population. So no matter what, you're still paying for it. Yeah, yeah. No matter what you're gonna be paying for it, whether you pay rent, that'll be interest only. And if you're taking a 40 year tation, that's pretty much interest only true no matter what the rate is.
True. Not much goes towards principle. So you don't think the financial institutions will come up with something innovative to continue their business, cuz you know it's a big part of their businesses, right? Yeah, no, absolutely. There would their business, if not more, there would. Two days ago there was a major bank that just purchased another institution.
Saw that, and the person that bought it was a billionaire, Canadian billionaire. And knowing that and what he said and buying that particular company, it, it, it makes me happy. This is the particular reason why his betting with the market that the market's gonna take off next. And he thinks in the next three years that that investment that he just placed will make him five times his return.
So that's a very big positive news. And we're talking about, I think he purchased it for 1.7 billion. Right. So that is one of the most positive news that I've heard in the last five months. Kinda like when Warren Buffet build up, build up the same company in 2017, right? Correct. The way. Yeah, he built, structured a huge deal.
500 million I think. Something like that. Yeah. Four or 500 million. And he made out huge afterwards. Right? Cuz that company didn't fail. Not at all. Tripled in value. They tripled in value. When the stocks drop down, I think to about like $6 a share, people were exiting the business, exiting the company.
Warren Buffet comes out, purchase it, goes back on at a discount too. He bought a discount for sure. He made a good chunk of change. Yeah. The smartest investors of all time. That's cool. Follow. Follow his. What, what? Okay. Well, so better in the housing market, you think? Well, I mean, I, I think so too.
There's, there's nothing, there's no, there's no other better investment than housing. Real estate and land are the best number one investments that you could ever make. Not crypto, not nft, nothing else. Cause it's not real, it's not tangible. It's not real estate. Yeah. You have to grab it, right? Yeah. It's not tangible.
It's like, you know, drinking water out of your hands, but you have to drink outta a cup. Yeah. The cup is your real estate. And there you go. You put water inside of a cup. That's your built up equity. That's your that's all your treasures and everything in it, and you're just drinking it. That's not gonna change, like metaverse is going down, you know what I mean?
Like, oh yeah, the real world is still here. You know what I mean? Bitcoin is. Crap note. Cause FTX and all that stocks aren't doing so well, so we're else gonna put your money at the end of the day. That's the way I look at it. And people still need a place to live and do business, you know? Absolutely. Yeah.
So real estate would always continue to flourish and in any type of economy and any type of recession, real estate's the number one asset class that gets anybody out of a recession and the number one out of a recession period. Asset class for wealth building too. Oh, Absolut. So the people want to know.
The people want to know when is the best time to enter in today's market? Oh, at anytime. Yeah. Like you could buy tomorrow. If you're gonna get a good deal, you have to work with you know, a well known, reputable real estate agent like yourself. To get a good deal on a property, you're gonna end up paying a higher rate.
I don't think that really matters, because you're gonna end up refin. Right. You just need the the right broker and product knowledge in order to make those type of moves. Like there's nothing stopping you from getting a one year term, reassessing the market after one year, and then refinancing during that period of time.
If the rates come down, great. If the rates go up a little bit more, well, you're hedging against another one. Right. So you won't be even paying a massive penalty if you want to ever exit that type of transaction, right? Cuz if it's somewhat affordable now, then you might as well do it because a lot of people have been waiting for prices to come down, but that, you know, that's only gonna happen when rates go up.
Right? Which makes their payments even higher than if the prices were to come. Like it hasn't come down as, I haven't seen the prices come down, at least in Toronto as much as the payments have gone up. So if they bought six months ago, The payments would've been cheaper than today. Oh, for sure. Right now, even though the prices might be, you know, 10, 15%, 20% down from the peak, depends how you look at it.
The payments are still way more expensive. They are not much, not much more like, let's, let's look at a million dollars, for example. Yeah. A million dollars at the best time in the market. I think you could have got your payments to about on 20, let's call it 30 year amortization, about $3,800 a month.
Now it's about 5,400. Yeah. It's a substantial jump, but we're still talking about a million dollars. We're not talking about, you know, half a million. Right. As a, as a mortgage to be able to afford a million dollar mortgage, you're, you should be making close to a quarter million dollars a year. It's almost four times your salary amount.
That's right. And that's general rule. Yeah. General rule. That's what the way you take it. And you just want to, if you're not using a calculator, that's what you'd say. But a quarter million dollars. Literally, if you want to take that $5,000 payment, for example, multiply it by 12, you're at 60. Right. Okay. I mean that's only using about 15 to 16% of your net income at the end, assuming you make two 50 though, assuming you make two 50.
Right. They overextended and over leveraged consumers that are purchasing homes. We'd be purchasing it. I'm trying to be a little bit politically correct right here. The way I'm saying this. Just say it, man. . No, just tell you you go into some sort of like alternative lending. You, you want to, you know, be part of the Jones's, I guess.
Yeah. And just get something just a little bit out of your means. There is lenders that do that type of transactions, but they're called equity based lenders. Sure. So they don't really care what you really make. They just wanna see that there's equity inside the home and you have a substantial down. , no matter if you're the best hustler in town, no matter if you're have three jobs and you're, you could sacrifice to make the payments every single month, there's still equity inside that home that the lender's happy to give you a mortgage for.
Those are the ones that I fear out the most inside the market. Those are the ones that would be the first ones to bow out and the lenders of borrowers, sorry, borrowers. We're talking about income wise between these two borrowers, 250 K versus Yeah. Somebody that's not making if, but still trying to get a million dollar stated income or state income.
Yeah. So yeah, I mean, like with the job growth and stability in the marketplace, there is still, you know, we have to see what happens next year if people are gonna retain their jobs. Well, that's it. Yeah. The whole job economy stuff, that's that's not good too. It's not looking too no good. A lot of layoffs going on.
Yeah. How have you, have you seen any foreclosures or any increase in foreclosures? Yeah, I got to ask that all the time. Yeah. I bet I see defaults. Yeah. Closures one. Yeah. Cause this is a long process, right? By the time, you know, you're, you're going through that the lender needs to take the money back.
Yeah. It's not worth it. They'd rather just negotiate with. With the lender or the borrower? The borrower with the lender, whether they sell the property or not, and just exit without paying any sort of legal fees. Or get another investor jump in and, you know, whatever. Right? Sure. Or retain, retain the the asset class and retain the property.
Cuz you could still redeem the mortgage even though it's in foreclosure. I'll give you an example. Let's say if someone did go into foreclosure and by the time they sell the property and they, they take acquisition to sell the property. and let's say there's a closing date of December 30th. They have all the way up to December 30th to redeem the mortgage to retain back the home.
I've seen that happen before for sure. Yeah. That was the craziest thing. Yeah. With all these fees and stuff. Yeah. Yeah. But they still redeem the mortgage, so they retained the home and they would sell it often in their own. That's, that's normal. I've only seen that circumstance only happen once. We'll, we'll see more foreclosures, I believe next.
Hopefully not, but yeah, we anticipate maybe like 0.8% would be into that type of default category versus what's a normal, I think it's 0.2. Okay. 0.02%, so significantly higher, but still in the grand scheme of things, still small, relatively small. Default defaults, they said would go up to about a five to 6% overall default, missing one to two payments until they bring it back Current.
Okay, well that's not good. A little bit scary. It is. It's a scary time for sure. And then that's what I'm saying. Save your money right now, . Well, that's what the government's trying to do, right? They're trying to rein in the spending reign in the innovation by default, by making prices, you know, the wealth effect kind of shrinks a little bit, right?
Yeah. But again, they, they put that equity inside the home. They're gonna be taking out that. It's like somebody in a mortgage broker that wants to refinance, liquidate the equity to pay off debt for a client. I mean, you incurred that debt. Now you're using the equity outta your home to pay off that debt.
What is the government doing? The government gave you that equity. Now they're trying to take back the equity to pay off their debt. How do they do that? By increasing the rates with the bonds and the yields. This is really interesting actually. Trudeau came out with a new bond for the Ukrainian.
Really a 500 million bond. You got one of you guys to check that out. This is the most interesting thing ever. Okay, so you could invest into this bond. It's 500 million and it's a 3% return. Who's guaranteeing it? Government tax? Us. Yes. Taxpayers? Yes, of course. Yeah. So we're giving back 3% to any investor that wants to invest in this 500 million bond.
Okay? The more logical thing to do would be giving me 500. Investing it in the Give , I'll give you guys back, you know, a modest 8% return on your investment . Pay out everybody else. Three, at least, you know, pays off some debt for the government. Okay, so let's talk about the fund. Perfect opportunity to do that.
Yeah, that's a really good idea. , we we pay back about 10 to 10 and a half percent return. All what is the fund? Okay? So these are like you, you wanna look at this as only a short term play on. These are As a borrower. As a borrower, yes. Yes. We never, this is not a long term type of play. Yeah.
Borrow to borrow that type of fund. Yeah. It's like a bridge. It is. It's completely a bridge. Bridge financing. So if anybody in their rights one will take it for longer than a three, four year term, it's not gonna happen. It's not what we do. There always has to be an exit strategy. What is that exit gonna look like?
And, and typically these loan amounts are not greater than about 250,000 on second mortgage positions. Okay. First mortgage positions. We go all the way up to 15 million. Oh, we just close the transaction for about five. Nice. Four and a half, five. Nice. Nice. So these would be short term. Or relatively short term, like I guess midterm bridges to get you to longer term financing.
That's right. At better rates and interest only. Yeah. Right. And there's like, some of them are construction financing, some of them are commercial financing just to to do the soft costs. For the built. So the reason why somebody would go with your fund is because the qualification is a little bit lower.
It's not as stringent as the a lender banks or even B lenders for that matter. They won't ask you for every single document in the world. We practically only ask you for three months bank statements and look at the property and disperse within 48 hours. And credit sometimes depends on the deal, right?
Depends on the deal. All right. Depends on the borrower. Depends on the criteria, but yeah, typically on an application we see. , but we always ask for three months bank statements. So if I'm gonna see like your bank statements show a negative balance at the, at the end of every single month, well, you're not the type of client for us, right?
If you're showing positive and you're making your payments on time you miss some payments because of financial hard. We still lend into that type of category. I mean, we're equity based lending. We're not looking at every single deal as if we're the bank, right? That means equity based lending basically means that there's still juice in the deal, so that if something were to happen, you're able to take that property back or at least take the rights to it, and then sell it underneath them, and then, Yeah, just the reup, your cost with some buffer margin for expenses.
Exactly. Legal fees, realtor fees, et cetera. Exactly. So like all the, all the mortgage Investment Corps and administrators, right now, they're going around a 75% loan to value, which would be only 70 price 5% of the appraised property price. Right. We're going up all the way up to. In today's market, well, we just started again.
That's aggressive. We literally started about two weeks ago doing that again because we've, we feel that the market has bottomed out, right? There's only our statistics internally from our analysts. They told us pretty much from all the indication that it has bottomed out now, unless there's somebody very desperate to sell around the neighborhood for you know, $300,000 less.
Well, that does not affect the comparables around the area with everybody else. Inside a home that they just purchased less than two years ago that purchased it for $300,000 more. Right? So we look closely at the appraisals and the way that the market's taking effect on the comparables, not necessarily looking at that one individual that sold it for a loss on his equity.
Okay. So how, okay, so if I was an investor coming into the fund to the. How, what kinda returns am I looking at? What kind of security do I have? Do I get new name on title? Do I have like, how does that work? Yeah, we stopped the name on title. The reason being is there, it's too complicated with, when it comes to paperwork, not to get into nitty gritty on it.
What we put under mortgage fund capital, we got a trust agreement that we offer to every single investor. The, the returns are 10%. So let's say an investor wants to come to me and say, Danny, we have. $300,000 to place. We do never ask them for the funds directly to deposit inside our account.
We find them to deal first and see if they're comfortable with that particular deal. And if they are and they would like to move forward, then they transfer the funds over as soon as we get signed back. Commitment from the borrower. And the transaction happens within 48 hours. 70, 72. That's a one to one deal.
That's the administrative deal. What about the the fund? Yeah, the fund's a little bit different story. Cause then like there's redemptions, like you can direct reinvestment plan. There's a redemption period on a quarterly basis. You get still paid on a monthly basis. It's all outlined in an offer memorandums that are, that go through our exempt market dealers.
There's. There. Yeah, the fund is a little bit different cuz they're more of a accredited investors that we have to look at. So this, just for context, this hasn't started yet. This for, this is going to be starting. This is, yeah. And it's about in the works. It's in the works. Yeah, we, so that's not the 10% fund?
No, no, no. That would be around nine, nine and a quarter. Oh, wow. Still, it's still reasonably very good. I, I believe. And do you think RSPs and TFSAs could be eligible for the stuff, or no? Yeah, absolutely. I mean, the average Canadian has about like $30,000 in RSPs, so you could take out those RSPs and put them directly into the, the fund.
They're. For that, I don't think there's any RSP offering anything greater than three. There's gss that are offering ground fours right now. It's a no brainer. It's no brainer to to do that. And it's an asset class, which is real estate. Yeah. And there's not much risk involved because you know, you have that buffer.
Well, if you're gonna 10%, 90% loan of value, that's different, but. And it's still 10% buffer anyway. Yeah. So through the fund, this fund, particularly the one we're discussing we're only doing it maximum. 80%. We're not going out to 90. So, so you have 20% buffer. 20%. So that's, that's, that should be safe. I mean, that, that is safe.
I think it's very safe. It's very safe. Yeah. It's not it, we can say it's pretty much a no brainer. Yeah. If you're investing in RSPs and TFSAs and all that. Sure. Like we're going to go back to our number of 1 million. Mm-hmm. , 20% is 200,000 that's left inside the home. So we're only lending maximum of 800,000.
So if something were to happen, you know, hopefully not. Yeah. And we don't, we hardly ever see it happen. Yeah. Yeah, you have $200,000 buffer inside of that home. That's fabulous. Yeah. Yeah. But what, okay, so what about redemptions, early redemptions and all that? Can they, can the investor pull the money out before the term ends?
Yes. We, we do. I mean the particulars are outlined in the offer memorandum, which is to be created. Let's, I'll give you an example. Let's say an investor says, oh I have my daughter's wedding coming up. Sure. And I gotta pull out 200,000 because it's a, you. You know, like my big fat Greek wedding or whatever.
Yeah, yeah. So it's like a big wedding and I need to pull out 200,000 cuz I can't get it from anywhere else. Yeah. Well, I mean there's, there's all circumstances we could work out with our investors. So 30 days, 60 days, redemption periods, that's completely fine. Yeah. So it's all to be outlined, but yeah.
No, that's awesome. I think that's a great product to have in the market right now, especially when, you know, everything else is so uncertain. It is. It. Again, we'll go back to it at the very beginning. It is save your money. Everything's uncertain until next year. These are only hypothetical predictions that we have.
Something I really, really have to emphasize, there is no economist out there that could actually tell what's gonna happen next. nobody. Yeah, of course. Nobody knows. Nobody knows nobody. They're nine outta 10 times they're wrong. Yeah. And they'll probably try to get it right in one year of their lives.
And then after that one year, they'll, they'll praise them on all over the media and they're wrong the following year. So I mean, it's it's don't trust everything that's in the media. Yeah. We hardly read the news. We hardly read the media. We only look at. and the analysts that are inside of our office that are looking at how many houses are sold, what is the percentage of sold versus not sold, what homes are back on the marketplace, what is the difference in pricing versus Toronto, and particularly Ottawa what's happening with with the government's tax act, where they, what's the new initiatives that are coming out in the marketplace?
Like, we take all that, put it into our system and we analyze through it. I think economists have a a different approach on how, how they observe the marketplace and what they think is gonna, is gonna happen. Something that no one ever brought up. Back in 2010, 2011 the Obama administration during the default period back in 2008, the financial crisis.
Brought up something called loan modifications. So what it was, was the administration would take the client's home and pay the banks a certain amount of money to modify that loan into a lower interest rate. So they would pay off the penalties and such. The government, what I didn't government. In the States.
In the States. Cause you were part of that, you were in the states at the time when this happened. When it all completely happened, it was called modific. And there was a bunch of mortgage brokers jumping into it, trying to do loan modifications, but it wasn't profitable cuz it was controlled by the government.
So you just get paid a flat fee for every single transaction you would do. I would never think that that would actually happen here in Canada. It's happening here? No, not yet, but it might, might possibly come into fruition. Okay. Just because we gotta look at it in a, in a. Scheme of things, right. The government and the banks always win.
The bank always wins. . Yeah, always. Yeah. Well, it's our backbone of our system. Right? Capital. You wanna take a five year, five year fixed Right now you wanna break the mortgage in two years, they have no problem with that. You're still gonna be paying a $40,000 penalty and it goes back to them. Oh, you mean like that?
Yeah. Of course. The people of the money have the most power for. Yeah, for sure. You want the bank, you're worried about the bank filing bankruptcy with your deposits? Well, you, you're gonna get a bailout from the bank. Sorry, from the government to automatically. Cause it's our backbone order system. Yeah.
They're not going anywhere. Right. That means housing is not going anywhere. There's always a solution for everything, but it's the time. When is this gonna happen? Is the question And we have to pinpoint exactly. When will that happen? We're predicting No. The rates will start dropping down. What's the Bank of Canada said, right?
They're gonna keep interest rates. They're gonna keep interest rates high until. Inflation comes down to Target, which probably around Q3 2023 or q4, something like that. Yeah, I think so. Q4. Q4 next year or 2024? Well, they did say that I think back in March that they would only bring up their policy rate up to three and a quarter.
We already hit that. Now they're trying to bring it up to four and a quarter, which I think will be in December 7th, the next meeting. Yeah. It's hard to take, take anything crc cuz they're like, oh yeah, borrow as much money as you want. Right. And then overshot it. Well after the beginning of the pandemic.
Yeah. We're, it's just not mortgages, it's the lines of credit for businesses. It's, but the majority of people's wealth comes from real estate or their net worth is in real estate. Even developers, like developers are having a very tough time right now balancing out their lines of credit that they use for their operational costs with their, the individuals that they're hiring.
What, what do they do in this case? All the construction workers? Yeah. Do they lay some, lay them off? What's. A lot of it's happening. It needs to happen cause projects are getting canceled cuz you know, it's just, yeah, there's no demand for it. Or at least people are scared to buy. You know, sales will drop by 40% in the pre-construction world, even more so.
Yeah. So you could score a good deal then, right? You can. You can. There's a lot of deals out there for sure. So it just depends on what you're looking for and depends on when you're ready to jump in. Like you said, there's no bad time to buy real estate. I think it's a forever asset class if you have a long run, long term mindset in place.
And I don't think you can lose. I don't, I don't think so either. I mean, if you exit too early, then yeah, you might. But you know, no, I don't think you could lose, just keep if you keep a house for longer than five years, I don't think there's any way you could lose no matter what you bought it for. I think if you buy a house for whatever you bought it for, February March, which was the absolute peak, but you sustained that home for the next four years, you won't lose on it.
Yeah, I don't see that happening. Yeah, I don't see it either. What about everybody that says, well, back in 1980, the rates were 20% or 18%. I mean, will we get there? I don't know. Like I don't think so. You know, I keep hearing that there's a lot of equity in homes now that people can weather the. , but I don't know.
I don't know. Could you picture 18% on a million dollars? It's like a credit card. Like buying a house on a credit card. Yeah. Payments will kill you. It's like finding, plus you're amortizing it too, right? Like you have to advertise some of it you can't, like, as part of the rules, you wanna just do it like interest only?
Well, yeah, you have to switch mortgages, but Yeah. You know, absolutely. I mean, I don't, I don't see that happening. Back in the eighties it was the houses I think were like a hundred, 200. Max, right. For mansion. Right. But like the average home were like 40, $50,000 I believe at that time. I don't ever see that 18% happening.
They might go up to 10, you never know. We're around sitting close to the four, five to 6.5, which is still relatively good. It's okay. I think we as. as Canadians, we got spoiled with the low, low, low rates and whoever never took advantage of that in the, in the past, I think is beating themselves down and wish they they did.
But yeah, I. I think still, like, you know, a medium value of three and a half percent of four is a good rate, right? Yeah. Cause in the commercial world, you're paying a lot more too. Yeah, absolutely. And, you know, it's, it's all a part of the, you know, when you say the 1980s from a hundred thousand dollar homes to like now where you have, you know, average prices, 1.3, 1.4 million, depending on where you're looking, that that's, that's a big difference because of the fraction reserve bank banking system that we have where they can just basically create money at a thin.
It's not restricted to any gold standard or anything kind like that. Yeah. Let me bring out my laptop. Do you want a million dollars in your account, Ken ? Exactly. Oh, sure I do actually. , it's all up. Yeah, it's all digital. It's all, it's all like shifting zeros, like you were saying. Right. Analyze all that.
Don't understand. But yeah, so it's funny cuz I, I talked to a lot of, I've talked to the economists before and no one knows what the end game is like. There's a term called the end game. How does this all end? You know what I mean? Cuz this can't go on forever. No, no it can't. It's diluting this currency.
It. Their, their best responses. I think I predict it. Might it, they'll never say this. Well, this is, and this is, well, yeah. I mean, the economists only exist to make weatherman look good. Yeah, that's what Ive heard. . That, that's a good one. I like that. No, but what actually, I heard from an economist that when I was talking to her, she, I, I basically,
The debt that we have in the national debt that we have is trillions of dollars, like one point whatever, trillion, whatever. I think it's like one point, 1.3 trillion or something. Really? Yeah, something like that. Like you could fact check that, but it's in the trillions anyway. And I was thinking like, how do you ever pay that off?
And she's like, why do you need to pay that off? What does debt even mean? Yeah. 1.3 trillion. It's the same thing like, you know, you know, mortgaging your house. It's still like a, it's a rental. Except the, that'll be the same thing in theory. This country will last forever. Not more than like your house, right?
But anyway, so she's saying that how it is defined by you can never, you can pretty much dilute that debt forever, right? As long as your standard of living goes up, as long as the GDP goes up, cuz productivity, right? Which brings in standard of living and all that. And as long as you're using that debt to do better for society, create roads and schools and whatever, right?
Care plans and all kind of stuff, then maybe in theory, you don't have to ever have, get rid of that debt, just keep diluting it away as long as the living standard of everybody goes up. Yeah. Let's, you know what? During the financial crisis, I think the, the national debt in the United States was two to $4 trillion in Canada.
US Yeah. During the financial crisis. Yeah. And now the, the national debt's at 14 trillion in the states. Crazy. That's. and the rates last year were, wow, they were just as low as here in Canada. But I don't think, yeah. National debt has anything to on the effective interest rates at all? Well, yeah, it definitely doesn't anything to do with interest rates and definitely it has no representation of anything.
Cause every country's in debt. But the reason why is like I, you know, in my primitive days I used to think how, how do we ever pay this off? The theories that you never paid off. Yeah, no, it's, you don't need to pay off federal federal government workers for next two years. You need to pay off the, the whole national debt.
Sure. I don't think they make trillions of dollars a year, but let the province let the province run the country. Yeah. Yes. We got duck forward running the province. Yeah, that'd be nice. No, no, no. We need, we need federal government for sure. This national security and all that kind of stuff. Yeah. Like, we need it for that app, whatever that was.
Ken arrived and spending millions of dollars on things that we don't need. There you go. There you go. There you go. All right. Anyway, with that what, how can we find out more about the, the fund? What do you wanna learn? How do you find more about you? Yeah. If you guys wanna learn more about the fund, please visit m f c m i.com.
It's mortgage fund, capital mortgage investment corporation.com. M F C M I N C M I C dot. If you like to visit key rate, it's k e y r a t e.com. You just go onto the website, you could select an agent to speak to, or, or just drop us an email or send us a, you know, a quick text anytime anybody's available to respond.
Cool, man. Yeah. Thanks for dropping by. Pleasure to talk to you. Hey, Ken. Thanks for having me. It was awesome. All right. Yeah.