Karl Denninger nails it. Here’s how the increasing financialization of everything kills buying power and crushes values.

Well, interest rates have doubled on mortgages in the last six months or so, and have not gone back down — nor will they to any appreciable degree. At 3% a $300,000 house has a P&I payment of $1,264.81.

That same house, at the same payment with rates at 6% is worth $210,960, a reduction of about 30%.

Oh, you think not? Well then that same person has to be able to come up with $1,798.65 a month for P&I and the $551.84 additional each and every month, over $6,600 a year, is not spent somewhere else because you can’t spend the same dollar twice.

Has gas come down appreciably? No. Nor has diesel. Diesel is in literally everything since the farm tractor and combine run on it, the trucks move everything at least the last mile with it, and thus the price level will not relent in its pressure until and unless that cost recedes.

If I spent $20 a week to get to work a year or so ago and now spend $40 that’s $1,000 a year that I don’t have to spend on other things.

But hey, as gas and mortgage rates have doubled in a year, so has your income, right? Right? The good news is, this in only the beginning. The bad news is, this is only the beginning.