Dan Denning: The Hollow Class, Part I

“To preserve their independence, we must not let our rules load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

– Thomas Jefferson

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America’s middle class has declined with the loss of manufacturing jobs and a sound dollar.

November 11, 2025 — Nearly 75% of US households cannot afford a median priced home in America, according to the National Association of Home Builders (NAHB).

That’s with a median house price of around $460,000 and a 30-year fixed mortgage at between 6% and 6.5%. Almost a third of renters spend about 30% of their income on rent (Redfin reports that it’s closer to 40% for home owners with a mortgage on a median priced home).

Housing has never been more expense or unaffordable in America. You can thank the intervention of the Federal government (especially the Federal Reserve) for that.

Since I published my most recent weekly research note, we learned the Trump administration is advocating the introduction of 50-year mortgages in the US. Federal Housing Finance Agency Director Bill Pulte made the announcement on Saturday. Trump posted something on social media comparing himself to FDR, who introduced the 30-year mortgage.

A 50-year mortgage doesn’t make housing cheaper. But by stretching the repayment period over time, it DOES lower the monthly payment on your principal. That lowers the percentage of your total income you’re spending on repayment. And in a strange way, it makes sense.

With a fixed rate mortgage and inflation running in the high upper digits, the real value you of your total debt goes down over time (inflation pays off your loan, as long as your income rises faster in nominal terms). Of course you pay off a lot more interest over 50 years than 30 years. And it takes a lot longer to build up equity (assuming also that house prices don’t fall).

But the point is…the government now knows to keep the housing market functioning and prevent a mean reversion in house prices, more intervention is required. By the way, Pulte also said Fannie Mae and Freddie Mac are thinking of investing in tech firms. Why?

Asset prices of any sort—stocks and houses—must not be allowed to crash. Especially before next year’s mid-term elections. The economic and social consequences of a crash are too dire to imagine. What happens next and what should you do?

Quite a bit to think about. The hollowing out of the American middle class has been thorough.

Dan Denning
Bonner Private Research & Grey Swan Investment Fraternity

P.S. from Addison: A small personal note re: Mr. Denning. Dan and I met in the mid-90s while we were both studying philosophy in graduate school at St. John’s College in Santa Fe, New Mexico.

The anecdotes vary depending on whom you talk to and what hour of the evening it is… but, what I remember is having a proper dust up in one of our seminar classes while reading Nietzsche’s Thus Spoke Zarathustra.

We’ll have the second part of the Hollow Class tomorrow with a follow-up from Bonner Private Partners guest analyst Joe Winthrow. Stay tuned.

A 50-year mortgage may not sound so bad. After all, it will allow homeowners to pay a lower total amount each month, and could thaw out a frozen housing market.

But, much like the increasing length of car leases, it underscores a harsh reality – that we live in an economy where everything needs to be financed for longer and longer periods of time.

America’s middle class used to be about owning their own car and throwing a party to burn the mortgage paperwork when it was paid off. Many Americans still do. But an increasing number are sliding below middle class while their expenses to keep up with that lifestyle soar.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

“To preserve their independence, we must not let our rules load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

– Thomas Jefferson

Turn Your Images On

America’s middle class has declined with the loss of manufacturing jobs and a sound dollar.

November 11, 2025 — Nearly 75% of US households cannot afford a median priced home in America, according to the National Association of Home Builders (NAHB).

Housing has never been more expense or unaffordable in America. You can thank the intervention of the Federal government (especially the Federal Reserve) for that.

Quite a bit to think about. The hollowing out of the American middle class has been thorough.

Dan Denning
Bonner Private Research & Grey Swan Investment Fraternity

P.S. from Addison: A small personal note re: Mr. Denning. Dan and I met in the mid-90s while we were both studying philosophy in graduate school at St. John’s College in Santa Fe, New Mexico.

We’ll have the second part of the Hollow Class tomorrow with a follow-up from Bonner Private Partners guest analyst Joe Winthrow. Stay tuned.

A 50-year mortgage may not sound so bad. After all, it will allow homeowners to pay a lower total amount each month, and could thaw out a frozen housing market.

But, much like the increasing length of car leases, it underscores a harsh reality – that we live in an economy where everything needs to be financed for longer and longer periods of time.

If you have any questions for us about the market, send them our way now to: feedback@greyswanfraternity.com.

As we approach the 250th anniversary of the United States, it’s worth recalling that our first Revolution wasn’t waged to destroy an order — it was fought to preserve one.

Political philosopher Russell Kirk called it “a revolution not made but prevented.” The colonists sought not chaos but continuity — the defense of their “chartered rights as Englishmen,” not the birth of an entirely new world. Kirk wrote:

“The American Revolution was a preventive movement, intended to preserve an old constitutional structure. The French Revolution meant the destruction of the fabric of society.”

The difference, Kirk argued, was moral. The American Revolution was rooted in ordered liberty; the French in ideological frenzy. The first produced a Constitution; the second, a guillotine.

Two and a half centuries later, the argument continues — only now, the battlefield is financial. Who controls access to money? Who defines legitimacy? Can a citizen’s ability to transact depend on their politics?

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.