This is the most concise way I can explain mortgages from my research.
You and the bank both start with $0. Your signature on legal documents allows the bank to type $100,000 into your account. You now have money to buy a house, the bank now has a loan to collect from you, and all that happened in reality was a few pen scribbles on a sheet of paper. “Money” was just created.
To the average 8 year old this is obviously a rip-off. You can’t just say you’re giving something to another person and not actually give it to them. That’s lying. However, banks and other financial institutions have been given permission to run this scam because the government, through use of the legal system, allows it to happen.
The government isn’t endorsing this creation of money because they can back it up with gold in a vault, or land or some other useful asset. The money governments allow banks to create isn’t a representation of any actual goods at all. The $100,000 typed into your bank account holds the same actual value as you typing $100,000 into a word document right now.
This scheme is called The Fractional Reserve System which, as I’m sure you can imagine, is much more nuanced than I’m explaining here.
For instance, if you can believe it, the swindle of allowing government to allow the bank to pretend to give you money relies on the simple hopes that you, as a citizen, will continue to get up and to go to work each day. There is no actual collateral to sustain our lending system, just whisper thin, fleeting confidence (arrogance) that no one will ask questions.
The system is so fragile, that if tomorrow morning we all stopped using money but kept to our daily routines, the entire financial economy would simply vanish, while nothing in the real world would actually change. Houses would still get built, food would still get harvested and schools would still open. Although I suppose bankers would need to learn something useful, that would change.
The real kicker here is that you’ve been pretend given $100,000 and are expected to actually repay $100,000 + $150,000 interest (more non-existent money). And how do you repay that loan if the money doesn’t exist? Your only option is to trade in 25 years of labour to accumulate other non-existent money generated by someone else’s loans.
In this way, money is the tool used to siphon human effort. The bank and government create the scam and reap the rewards while we get to choose between mandatory labour or living on the street. Real nice.
This system is also used by credit cards, lines of credit, car loans, student loans, and a myriad of other “lending solutions”. Any time a financial institution gives you a “loan”, they have actually created a debt that you (or your neighbour or family member) will literally be paying for with your life.