Money as Debt

Sassy · August 18, 2007, 11:34:53 AM

Since the stock market/housing etc are going wonkers here is a good video on our present monetary system that the Federal Reserve controls...
Money as Debt

benevolance · August 18, 2007, 05:31:53 PM

i do not need to look at that I can tell already...

ever since i went to university borrowed money I cannot afford to pay back I realised the nature of this economy is debt driven and that our money is barely worth the paper it is printed on... We are one event from the us greenback collapsing like the peso... being worth 1/1000th of what it is worth today

All my friends and family start looking for the exits when I start talking about the lie that is the american currency

August 19, 2007, 09:31:19 PM

I know it's very Un-American, but we haven't carried any debt for decades. Unless you want to count the monthly credit card purchases, but they're paid off every month in full the day before the due date.

fourx · August 19, 2007, 09:54:17 PM

I wish we could do that, Don, but with both of us working only a few days per week often it's a matter of just having to use the card and try to get it back to a zero balance in a month or two. We have no mortgage or car payments, but just things like pump or computer repairs, stuff that comes up very rarely, is hard to budget for.

MountainDon · August 19, 2007, 10:14:55 PM

Understood Pete. Took a while to get there/here. We have an "oops" savings account, sometimes a "no risk CD). We use the card like real money, seldom use coin/currency/checks. Then we collect cash back on the purchases. Works for us.

The important thing is to be able to think of what cash you really have and use the card accordingly... not use the card to it's max, to buy any cool thing that strikes your fancy, without thinking. I'm not sure where or how I learned that, but we passed it on to our son and I'm happy to say that it stuck. If we did nothing else right we've at least taught him fiscal responsibility.

August 20, 2007, 10:24:09 AM

We're trying to whittle our debt down - Glenn changed from well drilling to structural steel approx 8 yrs ago so it's like starting all over buying equipment etc. Then we bought the 2 properties in the mtns, but we are getting there... able to take more time off to relax or do the things we want to do

- debt just hangs over you... I'm always looking to find the best deals, best interest etc.

Here's another article about the Federal Reserve - this one from MSNBC... The thing about the Federal Reserve a central bank - they not only allow unscrupulous investment banks to rape the people who invest, but they are backed by the US gov't & therefore, it comes right out of our pockets in the form of taxes & inflation

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/CentralBanksAreStealingFromTheAverageCitizen.aspx

Central banks are stealing from the average citizen

What happens when fiscal irresponsibility gets rewarded with bailouts? You get more fiscal irresponsibility. Let's stop rescuing greedy financiers and investors.

By Bill Fleckenstein

As regular readers know, I have been a longtime critic of the Federal Reserve. Not too far back, that view was a decidedly minority one.

But as our credit bubble undergoes an ugly unwinding, it's dawning on folks that central banks lie at the epicenter of the problem. Andy Xie nailed it in Tuesday's Financial Times, which is why I've chosen to begin my column with quotes from his article "It's time for central banks to stop bailing out markets." con't at link above

benevolance · August 20, 2007, 12:22:53 PM

sassy

the central bank will always try to bail out the market to avoid any hiccups in the economy...

Because they are all in bed with one another....People like you and me are not on their radar and of no importance to them.

There has to be this sense of endless optimism where average americans spend all of their paychecks on their bills...House payments, car payments, personal loans, university loans.... they effectively keep the economy going and the banks make record profits....All because they believe the good times will never end and thus are unfazed by living in a situation where they are maxed out on debt payments.

You can expect continual government involvement in making sure the economy just keeps going as per usual. they will manipulate interest rates and pour money into the stock market..floating bonds whatever it takes to stabilize the market...

Sassy you are a smart gal....We are all on the long windy road to hell here...I think you know that.

MountainDon · August 20, 2007, 05:32:55 PM

Good for you and Glenn Sassy. When one decides on a career change there are often expenses incurred. Sort of like when we decided to emigrate from Canada to NM, USA. Sounds like you try your best and pay attention to the details.

The MSN article made some good points, but I have some more fundamental points as well.

As far as the Fed goes, whether or not one agrees, disagrees, or is totally ignorant of their monetary policy, they are not solely to blame for the state of an individuals personal economy. There is another important factor at work. Or rather, this other factor is not at work. Two words. Personal Responsibility.

No one holds a gun to your head to force you sign that long term mortgage for the over-sized, too expensive new home. No one holds a gun to your head to force you to take out a 6 year loan for that brand new, shiny, glitzy SUV or luxury auto. No one held a gun to your head when you put that vacation cruise, trip, whatever on a credit card. Ditto for the "gotta have it" Iphone, the latest Sony Playstation, the large screen plasma TV, and so on ad finitum. Certainly we are all tempted and enticed daily by persuasive advertising, by low monthly payments, no down payment, the "Joneses". What folly! Those are all personal decisions. They are choices one freely makes. It's those choices to satisfy instant self gratification that get most people into financial trouble. That is most people with the exception of those who were really forced into their untenable situation by health issues, and problems with the health care system. But that is another story, and a serious one, but another topic.

Some will say they purchased the expensive new home as an investment, to take greater advantage of income tax deductions. That not an investment, that's speculation. And the tax deduction is just that, a deduction. You get a portion of the interest back, but you're still paying interest!

Used cars are some of the best bargains out there. Somebody else paid the first year (the first minute) depreciation. As far as being used, so what? Cars last much longer than in the past when I purchased my first car.

Too many people were never taught to look at the real costs of credit purchases. Too many people were not taught the difference between "I need" and "I want" Whose fault is that? Well, it could be your parents. Or it could be the fault of Government Schools, not educating you properly. Or a combination. Or a personal addiction; gambling, drugs, alcohol. You can point fingers in many directions. But the finger should really be pointed at you . But you can't place the blame entirely on somebody else. At some point one has to take personal responsibility for all the self controllable aspects of personal life. That is, IF you want to exercise your ability to enjoy liberty and freedom, as much as one can, you must.

The ability to buy on credit certainly has it's place. Emergencies and unexpected expenses do occur all the time. But make a decent effort to pay the plastic off in the short term. Better yet, you might actually be able to save some money in a savings account for some such "rainy day". What a novel idea! Save money for the future rather than go into debt for the future. Whatever happened to the beliefs of our parents and grand parents?

So before placing the blame on the Fed, the government, the big banks, the credit card companies, take a hard look at how you got where you are. As far as spending, or not spending my money having a detrimental effect on the economy I'm not worried. I'm confident that the majority out there will not pause to really think about their debt load, other than to complain. For you, it will be business as usual. For those with a work ethic, a sense of personal responsibility, you will be able to thumb your nose at the banks and credit card companies and have them working for you. Interest bearing savings, real investments that grow over time, money you can spend today and not pay back for 20 - 30 days (on your credit card, while the monies grows a little in the bank account). What a deal!

As far companies making record profits let me simply say there is a difference between gross dollar profit and profit margins. Another topic, again. Invest wisely, don't speculate, don't be greedy. Invest in companies that make/provide things people need, not things they want. If you manage your personal finances properly you can take part in the profits by having money to invest. Let them help you make money you can use later.

I'm finished. Have a nice day.

Intersting article on how/why a lot of folks fool themselves about their money/debt.
http://www.bankrate.com/brm/news/financial-literacy2004/debt-psychology.asp

benevolance · August 20, 2007, 07:08:35 PM

Don

We are on the same page man...

I was speaking about the nation as a whole when I said we were all on the long windy road to hell...

Just because you and I have gotten our finances in order does not change the status of the economy for the country

Our banks our financial institutions are all 100% reliant on the debt economy..And as a result the nation is on a razor thin edge balancing the credit status and the value of the american dollar

If everyone stopped maxing out credit cards tomorrow for i phones and play stations.. if retail sales were down 40% across the country there would be a stock market collapse and another recession like the depression of 80 years ago

There would be systemwide forclosure on everything...The us dollar would be de-valued and we would all be screwed.

The stock market the forecasts the interest rates are all dependant upon the debt economy.... without the continuation of the debt way of life there would systematic failure and collapse of this country as we know it.

Walmart Visa mastercard the auto industry they all know that people cannot afford to buy products at the rate in which they want to sell them....So they allow people to buy on credit and make money off the debt...sales are artificially inflated stocks go up and the economy just keeps going.

They are counting on the country living beyond it's means this country is set up for the citizens to be in debt to their ears...To spend out of control to have new cars and new homes.... If that changed the fabric of this countries economy would be undone

August 21, 2007, 10:18:05 AM

Just a big pyramid scheme like Enron... :-/

glenn kangiser · August 21, 2007, 10:50:57 AM

QuoteJust a big pyramid scheme like Enron... :-/

and Social Security.

benevolance · August 22, 2007, 01:37:27 AM

well

Social security actually worked perfectly...Did exactly what it was supposed to do...

Until Bush and Cronies took 800 billion dollars from it

Left alone it would have been a worldwide example of how socialism can work perfectly by the people for the people

MountainDon · August 22, 2007, 09:40:21 AM

Social Security has one major flaw as I see it. That is, the amount of money being collected is not increasing fast enough to pay the increasing numbers who are or will soon be eligible to collect.

Social Security was originally introduced as a safety net. It was not intended to be a person's sole or major source of retirement funds. Which takes us back to Personal Responsibility and the lack of Americans saving money. I've never planned on Social Security as being a major retirement funding source, and it will not be that. It's "found money" as far as I'm concerned.

Traditionally as people aged they depended upon their family to help provide for them. This has become more difficult as the family has both shrunk and expanded. Shrunk, as in fewer children and expanded, as in moving great distances from where they were born.

benevolance · August 22, 2007, 08:57:58 PM

Don

Again social security was designed to allow for this...The baby boomer generation doubled the number of people before them...so in essence for 40 years the system had twice as many people paying in as drawing out...Which is where the massive 11 trillion or whatever came from and now the feds have stolen 75% of that money...

So now when the baby boomers start retiring there is going to be a problem

Had it been left alone there would of course be absolutely no problem whatsoever

August 23, 2007, 10:09:43 PM

No, don't worry the baby boomers are not going to live very long once they retire they are all going to get as many and as much narcotics as they want/need and thier major organs wont sustain longivity. It's all part of the bigger plan. The system has it all figured out get the old people on dope and they will die sooner, ya maybe some younger ones will die to but the target is the older folks. They have to make sure everyone is broke and depressed too or they wont be able to carry off hteir plan because if eople figure it out there will be outrage and pademonium. Social security will be just fine once they get rid of a bunch of old folks.

glenn kangiser · August 23, 2007, 10:17:01 PM

Thanks, Tanya, I needed that.

The Doctors, pharmaceutical companies and politicians are working on it as fast as they can. My brother-in-law is on 17 medications and thinks he needs them all. My neighbor had to quit all the prescribed medications to get over most of his problems -- he had about 10 -- if I think about it I could come up with a lot more.

MountainDon · August 23, 2007, 11:40:11 PM

QuoteSocial security will be just fine once they get rid of a bunch of old folks.

tanya, I hope you had your tongue firmly planted in your cheek when you wrote that. First of all, Baby Boomers are not old. Baby Boomers are widely thought of as those Americans, Canadians and Australians born between 1946 and 1964. However, many divide them into two sub-groups, the primary or real boomers, those born between '46 and '55 - '57. Also referred to as the Vietnam generation. Then the trailing edge boomers born until '60 - '64. Selecting the primary group that would be people aged approx 52 to 62. Hardy old.

The old folks are the parents of the boomers.

Boomers are not all on "dope", and if my circle of boomer friends is any indication (and maybe we're not) most of us are not on drugs that are going to kill us or turn us into thoughtless zombies. True, there are a few blood pressure meds and some cholesterol reducers in use between the lot of us. But on the whole we're active and taking reasonable care of ourselves.

Your comment rubbed me the wrong way. So being "old and crotchety" I had to let my mouth follow my thoughts.

glenn kangiser · August 23, 2007, 11:56:04 PM

I agree with you for the most part, Don.

The ones tanya mentioned I believe are more of a minority, rough guess 5% who went to the wars - saw too much they couldn't deal with - don't especially want to talk about it and will never be the same.

We have to remember that there are a bunch of our young people currently lost to drugs and alcohol and that many of them are depleting the Social Security System also. "Oh-my, can't function due to drugs -- here's your check." Still they are not a majority.

...but let a working man have a medical problem knock him out of work and it is impossible to get that SS check.

MountainDon · August 24, 2007, 12:21:21 AM

Quotesaw too much they couldn't deal with - don't especially want to talk about it and will never be the same.

And what happened to them is most unfortunate. I know a number, some have died, some are wrecks, but most don't exhibit any visible trauma. How different people handle those types of things is extremely varied and impossible to forecast. There but for the grace of God and my parents living on the north side of the US/Canada border went I. Thing is, back then I might've even enlisted. :-/ Tho' the Canadian armed forces, such as they are/were, didn't want me because of my eyesight. But they were less in need of soldiers/sailors/airmen.

Yes, and then there's the young drug abusers. I have much less sympathy for them, or more correctly no sympathy at all. They do suck resources up that could actually do more good elsewhere. I don't know what should be done with them; prison costs too much, another suck on the tax payer dollar. Too many on the cultural left make excuses for their bad behavior; "it's not their fault, it's because they're poor, because they didn't have a live at home Dad, because of this, that or another thing. Ooops, sorry. Not too PC of me and there I go again meandering off into the "Personal Responsibility" arena again.

And tonight I'm probably in a particularly foul mood after spending a couple hours at the local Jemez forest service meeting regarding the FS Travel Management Plan. By their measure "my forest", the Santa Fe NF would go from approx 8300 miles of routes as present to 3198 miles as they propose. Just another rant. But not nearly as bad as the proposal for the Coconino NF in AZ.... going from hundreds or thousands of miles down to 24.5 in their proposal!!

G'nite

glenn kangiser · August 24, 2007, 12:27:14 AM

If we could figure something to do about things like tampering with recreational public property, that would be great. The system is broken in this area too. The bureaucrats are stealing our land -- and for what. :-?

Tons of public land around here is being illegally locked down by our BLM etc. public servants, to the point of them even locking off public roads that are access to land locked private property.

August 24, 2007, 12:30:23 AM

Sorry 'bout my little outburst there, Don -- that probably didn't help you any did it? :-/

MountainDon · August 24, 2007, 12:35:57 AM

The SFNF proposal is still just a proposal. I did take particular pleasure in pointing out to them that they had forgotten at least one forest road that was still nescessay even tho' they had neglected to put it on the proposed route maps. That is the road I use to get to my little piece of paradise. They did apologize and even tried to make a joke of it as they realized that it's the same road used by the former FR District Head Ranger to get to his land. (He's now in CO for a year or so as he advances thru the system towards retirement. Another Boomer.)

MountainDon · August 24, 2007, 12:37:39 AM

QuoteSorry 'bout my little outburst there, Don -- that probably didn't help you any did it? :-/

I put the cause of that down to your advancing age and creeping drug induced senility.

glenn kangiser · August 24, 2007, 12:48:38 AM

You got it Don -- sometimes I'm not even aware of my own presence. :-/

Think I'll run out and get me some Yerba Santa

Darn stuff's hard to OD on though. ....but you can smoke it.

tanya · August 24, 2007, 04:16:56 PM

Well I am not saying every old person is going to go on dope but they sure are offered it and those who don't know any better often go for it and find out later it is hard to get off of. I know old when I see it and believe me once you hit 40 well.... and I am older than that so I can say that. Face facts people when you get old you start to feel it and if there is someone offering to take that pain away or help with depression high blood pressure etc . you might very well take them up on it you might even think it is in your best interest. BUT really those drugs both the narcotics and the rest of the stuff they have available these days, allergy meds, high blood pressure etc. well those are hard on the major organs if you take them you will die sooner or maybe later. The medical industry does not continue to grow by leaps and bounds by making people healthy. And if they can get some folks before they reach social security age well.... a bird in the grave is better than two in the bush.