Banks no longer posting deposit rates?

[GolfAddict]

If people used the spare assets that they have lying around hoping to buy gold with to pay off their high interest credit cards or home loans instead, they could be alot better off.

As someone without any debt i can tell you the current market conditions dont affect you as much a those with a debt load. Having gold in the bank may or may not help in bad times, but a debt over your house can leave you living on the street after some greedy banker hits hard.

Quite true. Being 100% debt free certainly affects my investment decisions as well.

 

[EE_Bota]

If people used the spare assets that they have lying around hoping to buy gold with to pay off their high interest credit cards or home loans instead, they could be alot better off.

As someone without any debt i can tell you the current market conditions dont affect you as much a those with a debt load. Having gold in the bank may or may not help in bad times, but a debt over your house can leave you living on the street after some greedy banker hits hard.

Why is it when two people enter into an mutually agreed upon transaction, and one of them fails to live up to it, we get to capriciously call the other one greedy?

I am not offended, or angry, or even bugged, and my question is rhetorical.

This thread is bemoaning low interest payouts for deposits. Well, since I am not a bank, I cannot loan more money than I actually have. But I can loan money I do have, and if I loan it to a person for the purchase of a house, I will have to demand the house if I cannot be repaid. So..I would have started out just wanting some sort of return on money...but graduate to greedy.

 

[grsthegreat]

Why is it when two people enter into an mutually agreed upon transaction, and one of them fails to live up to it, we get to capriciously call the other one greedy?

I am not offended, or angry, or even bugged, and my question is rhetorical.

This thread is bemoaning low interest payouts for deposits. Well, since I am not a bank, I cannot loan more money than I actually have. But I can loan money I do have, and if I loan it to a person for the purchase of a house, I will have to demand the house if I cannot be repaid. So..I would have started out just wanting some sort of return on money...but graduate to greedy.

good thought..but tell that to the people that had their homes taken with things like robo signing. And anyone that can come up with an idea such as variable rate financing and sit their and sell it to unsuspecting public...they dont garner any respect from me. sorry.

 

[schoolsout]

good thought..but tell that to the people that had their homes taken with things like robo signing. And anyone that can come up with an idea such as variable rate financing and sit their and sell it to unsuspecting public...they dont garner any respect from me. sorry.

Agreed...too bad you won't see me agreeing with you.

 

[schoolsout]

I should probably start a new thread, but this goes back to what I was talking about with grsthegreat's generation...and what helped him "get his" and why people like me (and others, not just those beginning their lives) are suffering for it...

Guest Post: You Can't Fool Mother Nature For Long: The Substitution of Debt for Productivity | ZeroHedge

Submitted by Charles Hugh Smith from Of Two Minds

You Can't Fool Mother Nature For Long: The Substitution of Debt for Productivity

The "big story" of the U.S. economy is that we have substituted expansion of debt for meaningful increases in productivity.

For the past 30 years, the U.S. economy has become increasingly dependent on explosive debt expansion for its "growth" rather than on meaningful rises in meaningful productivity. Growth is in quotes because growth based on secular increases in productivity--that is, the same investment of labor and capital produces goods and services of greater value--is qualitatively different from "growth" based on a pyramiding of debt.

Real growth based on rising productivity is sustainable, "growth" based on ever-greater expansions of debt is not.

What has kept the Status Quo from falling off the debt cliff over the past four years is the substitution of exploding Federal/public debt for no-longer-rising private debt. If Federal borrowing were to return to 2006 levels, the economy would immediately experience a severe contraction.

We can understand this reaction as that of a debt junkie economy suddenly deprived of massive infusions of fresh credit.

This substitution of public debt for private debt is simply an attempt to fool Mother Nature. The justification of the Status Quo for impoverishing future generations is the massive expansion of Federal debt is needed to "kick start" the economy, i.e. "get us through a rough patch."

After four years of kick-starting and muddling through rough patches, the economy has yet to recover benchmarks set in 2007, much less grown. Meanwhile, the kick-starting added $6 trillion in visible public debt and trillions more in off-balance sheet obligations and backstops.

Substituting debt for productivity is also an attempt to fool Mother Nature. Here's how the substitutiion works: when productivity is flat, then "growth" can be created by leveraging the economy's surplus into greater amounts of debt, which can then be squandered on mal-investments and consumption to foster an illusion of "growth."

Note that I use the phrase "meaningful productivity." If a highrise tower is built in the middle of nowhere and sits empty, the construction and related costs (inspections, transport of goods, utilities, etc.) are added to the gross domestic product (GDP) as "growth," even though the empty building is not adding any real value to the economy.

The same can be said of millions of unneeded medical tests, millions of doses of medications that don't work as advertised, etc.--all the costs of sickcare that rarely add productive value to the economy but which are all added to the GDP as "growth."

If you leverage $100 per month in surplus capital in a household into a $100,000 home equity loan that is squandered on luxury cruises, a new kitchen, boats and dining out, then that explosion of spending boosts "growth" like a shot of cocaine.

But then what happens when the borrowed money has all been spent? What happens when the borrower defaults? The underlying assets--the boat, home, etc.--can all be auctioned off, but a massive loss remains to be swallowed by the lender.

Needless to say, the bankrupt borrower will be unable to borrow another $100,000 any time soon, even if interest rates are lowered to near-zero.

That's what happens when you try to fool Mother Nature by substituting debt expansion for increases in meaningful productivity. Eventually the surplus that is being leveraged into debt reaches the point where it cannot leverage any more debt, and the over-leveraged borrower defaults at the first financial bump.

An economy that is dependent on constant massive increases in debt to fund its "growth" is not sustainable. In a very real sense, the U.S. has been fooling Mother Nature for 30 years. Now we've overleveraged the nation's shrinking pool of surplus capital and assets, and the last rabbit has been pulled from the magician's hat. Mother Nature (i.e. reality in the form of a transparent, marked to market balance sheet) is about to take her revenge on all those who reckoned she could be fooled forever by ever-expanding debt.

 

[ultrarunner]

I remember a finance class back in the 80's where the Professor was explaining the wonders of leverage debt/buyouts...

Kind of made people with money in the bank to be simpletons...

I raised my hand and said you can't put a price on peace of mind... he paused and somewhat agreed and then said for those interested in Peace of Mind the Psychology Department is in the next building...

 

[foggy1111]

When I turned 50 years old....I decided that I would not take on any more debt....and began to quickly pay off any mortgages I had. At 53 I was debt free and able to retire. I felt that at age 60 or so....that you do not want to have big debts hanging out there....and possibly no earnings power to pay em off. It just happened quicker than I thought due to a good biz envirnment and a good biz plan. :thumbsup:

Anyway.....my plan worked for my family. And it continues to provide for us...even in difficult times. I'm just not too sure about what's gonna happen next....but hopefully diversification will help us muddle through.

 

[grsthegreat]

When I turned 50 years old....I decided that I would not take on any more debt....and began to quickly pay off any mortgages I had. At 53 I was debt free and able to retire. I felt that at age 60 or so....that you do not want to have big debts hanging out there....and possibly no earnings power to pay em off. It just happened quicker than I thought due to a good biz envirnment and a good biz plan. :thumbsup:

Anyway.....my plan worked for my family. And it continues to provide for us...even in difficult times. I'm just not too sure about what's gonna happen next....but hopefully diversification will help us muddle through.

Isnt it an amazing load off of ones back to be debt free?

i am more amazed every day. Literally no more tensions about having to go and earn a dollar.

 

[LazySusanFarms]

While I can have little impact on how the federal government can spend our money (except vote), I can control my own personal debt. Many of the threads on TBN deal with this very issue of personal debt. Investing can be a very important tool to use when preparing oneself for retirement. While retiring with no debt is preferred to retiring with debt, some form of retirement income must be present to take the story forward. While we are all paying off our debts, what else should we be investing in to help prepare for retirement? Many invest in themselves by creating part-time businesses that they can continue into retirement to provide supplemental income and keep ourselves busy. Others might save money and invest it in tangible things such as CDs, bonds, stocks and precious metals. All work but most work better when combined with other investments so that we are not putting all of our eggs in one basket. Diversity can reduce risk so having sources of supplemental income along with some outside investments can be a great strategy for some.

 

[grsthegreat]

While I can have little impact on how the federal government can spend our money (except vote), I can control my own personal debt. Many of the threads on TBN deal with this very issue of personal debt. Investing can be a very important tool to use when preparing oneself for retirement. While retiring with no debt is preferred to retiring with debt, some form of retirement income must be present to take the story forward. While we are all paying off our debts, what else should we be investing in to help prepare for retirement? Many invest in themselves by creating part-time businesses that they can continue into retirement to provide supplemental income and keep ourselves busy. Others might save money and invest it in tangible things such as CDs, bonds, stocks and precious metals. All work but most work better when combined with other investments so that we are not putting all of our eggs in one basket. Diversity can reduce risk so having sources of supplemental income along with some outside investments can be a great strategy for some.

yup, all you say is true. Everyone will have a different need before retiring.

Its just sad to see people wanting to invest their extra money in something getting better than 1% interest (like CD's) while they continue to rack up debt on credit cards costing them in excess of 16-18%.