OH LORD

[Turk]

Originally Posted By: msparks
Originally Posted By: Gary Allan
I really ....REALLY think that this is the least of our worries. PEL-EEZZ step back from the propaganda bubble for just a second and catch the way bigger picture here.

We've been economically hobbled. Quit thinking that this was some accident that just "happened".


Yes I totally agree, We have a Fiat Currency that is made through debt, the only way to keep the economy going is to produce more debt, google "money as debt"





I don't understand going into debt. When you go into debt to but or get something, you pay interest on it.

When you pay interest on something, you PAY MORE for it.

Example:

>>>> ***If I buy something for say $1,000, I want to pay $1,000 for it, not $1,124.35 for it.***
So, almost whatever it is except a home, save the money to get it and pay cash. Then you'll ACTUALLY HAVE MORE MONEY to save, invest or buy something else!

 

[cven]

These are words spoken 200 years ago from a very smart American.


"If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered."

 

[Shannow]

And when a company lends you money to buy a home, they are making an investment.

They are giving you money now, and expecting a return in the future.

They balance their risk on a projected increase in your property value, am anticipated inflation rate, and a predicted cost of cash, and they charge you an interest rate commensurate with what they see their risk as being.

They get greedy, and take on a higher level of risk (enabled with the legislation in your previous post), but nobody put a gun to their head and forced them to take higher risk.

And their investment failed.

Are they going to bail out every failed investor ?

I see a couple of flies running up a wall...I can't lose if someone else will cover my bet.

And why cover the people who invested in risky mortgages, in stead of those who had risky mortgages ?

 

[oilyriser]

Government run banks will do exactly the same thing, only worse, since they are run by elected officials.

 

[Pablo]

Mostly right. But...this part is incorrect in some cases: " but nobody put a gun to their head and forced them to take higher risk."

You may want to do a little research on that one. AND check out some of the companies that went under or had "license" issues several years ago when they failed to play the game.

 

[msparks]

Originally Posted By: tpitcher
Originally Posted By: msparks


Yes I totally agree, We have a Fiat Currency that is made through debt, the only way to keep the economy going is to produce more debt, google "money as debt"





I don't understand going into debt. When you go into debt to but or get something, you pay interest on it.

When you pay interest on something, you PAY MORE for it.

Example:

>>>> ***If I buy something for say $1,000, I want to pay $1,000 for it, not $1,124.35 for it.***
So, almost whatever it is except a home, save the money to get it and pay cash. Then you'll ACTUALLY HAVE MORE MONEY to save, invest or buy something else!

If you don't understand going into debt, then you don't understand how money is made. Money is made when someone takes a loan, then and only then does the central bank (The Fed) print some new money to cover that loan.

As I said watch "money as debt" and you will understand how our current money supply is created. This is the reason that Ron Paul keeps talking about the fed "creating money out of thin air"

Yes for the average citizen debt is bad, but for our economy to survive the country (and world for that matter) must continue to create more debt. It's a sad thing.

 

[Gary Allan]

Yep. The world has run on our debt for quite a long time. It actually worked well for us.

The symptoms of a good economy were new home starts and car purchases. They were byproducts of "consumer confidence" in that consumers "extended" faith in the job promotion, the over time ..whatever. It, in turn, employed lots of other people in "enhanced mode" and they consumed more. Now keep in mind that all of them already were spending nearly 100% of their paychecks weekly on other stuff. It was that "extension" that spurred "growth" by infusing more today-borrowed money into today's economy. Now 30%+ of this went offshore in lower end consumer items ..so it was an "assured drain" on the domestic economy.

Eventually, due to a "lead/lag" momentum/inertia in earning/spending would result in the ultimate "over extension" of the credit markets. They would normally start showing stress as the paychecks were saturated with "making payments" and they didn't also support "others" by having too many payments and too much month left at the end of the money. Now you typically would have a recession. This would sweep away the enterprises that were maintained on pure volume and credit ...flush a small segment of the population into bankruptcy ...which would, in turn, send a global shockwave and send those foreign markets idle as well. We'd see our labor force reshuffled ...they would realign their costs/labor situation ..and the differential would be reestablished and we move on again. It's all very natural if you insist upon seeing max growth and max yield in the shortest time possible. It's very much like mashing your throttle until you run out of gas ..then sitting idle until the fuel can shows up. Naturally most of us would rather just cruise along and have the fuel can already there when we're low on fuel ..but that's not how wealth is accumulated. You grab when the market is swelled ..and duck and roll when the thing goes bust.

In our current situation there were a couple of new twists to the normal "quench and purge" cycling. The economy was falsely maintained by "forced" new home starts. Hence the normal job destruction and credit over extensions were masked. Instead of housing being a leading economic indicator of an otherwise healthy economy, it was the reason the economy stayed afloat with "apparent" vitality (versus "true" vitality) while tons of US$ went offshore without skipping a beat. This "extension of an over extension" without the normal and natural "pause" that a minor recession would bring ..has now resulted in the mess we have today.

 

[Gary Allan]

Again, folks, this could merely be a "strategic" movement in avoided losses. For all we know Beijing said "Hey, either accelerate our development ..or we'll go on an expansionist agenda". Since we're so intertwined with all of those under our defensive umbrella ...everything has to be "weighed" to produce the least cost/max benefit in outcomes. That's why when Kim rattles his saber ..it always ends up in some form of (quite literally) "buying him off" (called trade concessions).

We bought off Japan in the 80's with conceding our consumer electronic market in lieu of them making world class weapons. Imagine them competing with us in that sector.

Naturally, even if this was truly "for our own ultimate benefit" (as was the Cold War and whatnot), there are always the profiteers who assure that they sweep a whole bunch of the booty into their treasure chests in the movement.

 

[oilyriser]

There is no requirement to keep creating more and more debt. You can have an economy with a fixed money supply where prices continuously get lower and lower as economies of scale make things more and more efficient. Inflation is used to slowly eliminate government debt, and it allows business to lower people's wages when they think they are getting a slight raise.

 

[Gary Allan]

REALLY? No, surely you jest

Think of where we'd be if we were still on the gold standard ..locked in a $31/oz (or whatever it was).

Debt is fine if you do something productive with it. Educating your people ...etc..etc. When you create it merely for the sake of commerce ..that is, consumption merely for the sake of commerce ..then it's not such a good idea ..especially if the commerce has no inherent value beyond the point of consumption.

 

[Tempest]

Quote:
Government run banks will do exactly the same thing, only worse, since they are run by elected officials.

Fanny May and Freddie Mac are gov. lending institutions and are at the heart of the matter.
Quote:
Debt is fine if you do something productive with it. Educating your people ...etc..etc. When you create it merely for the sake of commerce ..that is, consumption merely for the sake of commerce ..then it's not such a good idea ..especially if the commerce has no inherent value beyond the point of consumption.

My posts must be rubbing off on you Gary.

 

[Gary Allan]

Quote:
My posts must be rubbing off on you Gary.


No ..you're just beginning to see things my way

 

[Shannow]

oilyriser, in that type of world my savings actually increase my buying power...what sort of messed up world lets you become more prosperous by saving ?

 

[oilyriser]

You'd still have an incentive to spend your money since the banks would charge a storage fee, just like when you buy gold or silver certificate.

 

[1sttruck]

http://www.nytimes.com/2008/10/05/business/05fannie.html?hp

Pressured to Take More Risk, Fannie Hit a Tipping Point

When the mortgage giant Fannie Mae recruited Daniel H. Mudd, he told a friend he wanted to work for an altruistic business. Already a decorated marine and a successful executive, he wanted to be a role model to his four children — just as his father, the television journalist Roger Mudd, had been to him.

Fannie, a government-sponsored company, had long helped Americans get cheaper home loans by serving as a powerful middleman, buying mortgages from lenders and banks and then holding or reselling them to Wall Street investors. This allowed banks to make even more loans — expanding the pool of homeowners and permitting Fannie to ring up handsome profits along the way.

But by the time Mr. Mudd became Fannie’s chief executive in 2004, his company was under siege. Competitors were snatching lucrative parts of its business. Congress was demanding that Mr. Mudd help steer more loans to low-income borrowers. Lenders were threatening to sell directly to Wall Street unless Fannie bought a bigger chunk of their riskiest loans.

So Mr. Mudd made a fateful choice. Disregarding warnings from his managers that lenders were making too many loans that would never be repaid, he steered Fannie into more treacherous corners of the mortgage market, according to executives.

For a time, that decision proved profitable. In the end, it nearly destroyed the company and threatened to drag down the housing market and the economy.

Dozens of interviews, most from people who requested anonymity to avoid legal repercussions, offer an inside account of the critical juncture when Fannie Mae’s new chief executive, under pressure from Wall Street firms, Congress and company shareholders, took additional risks that pushed his company, and, in turn, a large part of the nation’s financial health, to the brink.

Between 2005 and 2008, Fannie purchased or guaranteed at least $270 billion in loans to risky borrowers — more than three times as much as in all its earlier years combined, according to company filings and industry data.

 

[Gary Allan]

Originally Posted By: oilyriser
You'd still have an incentive to spend your money since the banks would charge a storage fee, just like when you buy gold or silver certificate.


We're already charged a storage penalty. It's called interest and dividend income taxes.

 

[Gary Allan]

Quote:
Between 2005 and 2008, Fannie purchased or guaranteed at least $270 billion in loans to risky borrowers — more than three times as much as in all its earlier years combined, according to company filings and industry data.


Hmm..so you could under double the figure and account for all of their "risk". Now ho much is left over for the rest of the $700B that won't be enough

 

[buster]

http://www.cnn.com/video/#/video/us/2008/10/04/dnt.lemon.natl.debt.clock.cnn

Debt clock doesn't have enough spaces for Nat'l debt. LMAO!

 

[Primus]

Obviously bad news become already a norm now: The Fed is Bankrupt: Update on the Helicopter Think the next week may be really critical because of CDS contracts settlement for Fannie&Freddie (Oct. 6) and Lehman Brothers (Oct. 10). The settlement could result in billions of dollars of new losses for banks and insurance companies. Who knows, may be the Fed situation and coming CDS settlment became a base for all these rumours about possible universal shut-down of the banking system. If true, we are not far from Economic Emergency.

 

[Gary Allan]

Quote:
Economic Emergency


So, can we expect the globe to grind to a halt? What will that do to the jet stream??

Even slips of worthless green paper have tremendous power.