The Physics of Home Mortgage Debt

I previously posted here that it looked to me like Home Mortgage Debt had turned parabolic. I then posted here that I felt that trend was changing.

So, just for the sake of argument, let's see what happens if we apply a bit of physics to the "problem".

Let's call the current home mortgage debt the position.

Let's call the change in that position in one quarter the average velocity (in that quarter).

Let's call the change in that velocity in one quarter the average acceleration (in that quarter).

Why might we want to do that? If we know the acceleration, we also know the force. They are directly proportional to one another.

At a gut level, we already kind of know the force. It is in all the headlines. The housing bubble may be popping and prices may be coming back down to earth (much like a baseball when tossed into the air). If true, wouldn't it be nice to actually see its effects?



The velocity clearly shows that although we're still moving forward, we are starting to slow down. That's not especially bad news. It isn't the end of the world just because something slows down.



The acceleration shows why we are slowing down. There is a force being applied. The Fed is "hitting the brakes". It is more than that though. The acceleration appears to be growing worse. A better analogy might be that the driver of our car isn't just pressing down on the brake pedal. He's also got the car in reverse and is increasingly pressing down harder on the gas.

Why would he do that? He might not notice what he's doing or he simply might not have a choice. Maybe he sees something in the road that bothers him, like an oncoming truck (i.e. inflationary pressures due to rising oil prices perhaps).