Recession? Inflation?

[bigpete]

A complement to his parents for communicating those values. I'm doing my darnd'est with my 12-year-old son and 9-year-old daughter. One gets it, the other reists it. I think they'll both figure it out each his/her own way.

Okay here I go....

Every personal value..., (almost) can be related to parenting. It's instilled at some point that some things are entitled and some things are earned.

My daughter may not "get it" as soon as, or in the same way as, my son. Only because she's absolutely adorable and receives lots of attention based on her looks. Makes for some interesting interaction at home when teachers, parents of friends, and even clerks at Lowes fawn over her and then she has to work for things she wants around here. My son can't wait to meet labor law age restrictions and start working and my daughter wants to watch "Legally Blonde" over and over to see the beautiful slacker graduate from Harvard and take over the legal world....

/forums/images/graemlins/crazy.gif

 

[bigpete]

Fivestring, we probably wouldn't have much of a debate on the banking industry. We'd probably agree.

My basic position is that it is an industry gone awry when technology allowed for finacial collectivism and the "corporatization" of banks. Of course that lead to the expansion of competitive lending, ease of availability of unsecured money, and ultimately, an industry with a teetering balance sheet on a spiraling, self-perpetuating sleigh ride to self-destruction. The real cost is a lack of TRUE development of personal wealth. and a shrinking middle-class. In other words, the uninitiated can quickly find themselves in unsurmountable debt because they are the very marketing targets of an industry consuming itself, and ultimately its customers, because of debt write-offs.

That should kick off a lively discussion /forums/images/graemlins/smile.gif

 

[mountain_man]

My oldest son gets at least 1 new credit card application every day. These blood-suckers can't wait to tie him up in debt at obscene interest rates/fees. Although I'm not a big fan of new laws, here's an industry that could use some sensible regulation!

 

[bigpete]

I spend part of my workday in gaming regulation issues. Casinos generally hold themselves to more ethical promotional and public communications standards than finacial institutions.

 

[cowboydoc]

Not much to argue about. YOu pretty much just stated a fact for alot of people in this country. /forums/images/graemlins/wink.gif

 

[fivestring]

I posted this on CountryByNet a while back.
This can reduce unwanted credit card offers.....

If you want to be removed from the pre-approved credit card offers, here are the phone numbers of the big 3:
Trans Union... 1-800-680-7293
Experian... 1-800-353-0809
Equifax... 1-888-567-8688
Follow the voice prompt instructions .
This is good for two years only.
You will later be mailed a form to sign if you want to opt out permanently.
I now only get offers from companies I had accounts with.
My wife didn't do this and gets one or two offers every day. It dulls the paper shredder!!! /forums/images/graemlins/grin.gif

 

[TerryinMD]

Recession - maybe.

Inflation - maybe.

Economic correction - probably.

What I see happening is the long, overdue economic correction for a couple of decades of strong economic growth. The bubble had to burst at some point. And that point started a couple of years back.

But, look around you. Some areas of the economy are stagnant, some are holding their own, some are still going strong. Now, how does one explain the real estate industry. Mortgages are cheap, but people are still building big, expensive homes. For the world of me, I cannot understand our current economic situation. It's a matter of haves and have nots.

I was laid off for nine months and survived intact. All the bills were paid and, in fact, we were able to save a little money in the beginning to help us for the last couple of months. To be honest, we were fortunate. The one thing that saved us financially was the fact that we were not house poor, car poor, and having a lot of credit card debt. Yes, made a little money on the side with the tractor, kept the family market garden business going, and cut back on some of the unnecessary expenses.

Just like one of the posters pointed out earlier, there are plenty of opportunities to make money if you are willing to take on any job. But, to be honest, while you're collecting unemployment, you are earning more money per week than by working a job for around $10/hr (depending upon your state allowances of course). Once, the unemployment runs out, a couple of weeks of hard looking and you should be able to find a job with a decent, liveable wage. You may not have all of the benefits from your previous job, but it's better than the alternative - nothing!!

I'm working as a government contractor now and a lot of the people that I'm working with were in or near to my situation. Most of the people come from two industries - finance (banking and investing) and Informaiton Technology. The Baltimore/DC metro area has gone through a big upheavile in both areas during the past two years and I've been hearing lots of stories of how the companies operated. Two issues came up: One, the company was bought out and then gutted getting rid of duplicate jobs/departments/etc. Two, the company just downsized to save money or in my case, entered bankruptcy.

The area of biggest growth has been in Homeland Security. There are plenty of jobs in this area, but if you do not have a security clearance you cannot land a position. Catch 22!! Plenty of qualified people eliminated due to a clearance.

Oh well, just my .02 for what it's worth.....

Later,

Terry

 

[pruntyc]

I just wish they wouldn't send so much of our money over seas. And it seems like each president that we have had in the last few years, want to show that they can spend more than the one before them. I think we could use more of it at home. Let the other countrys support themselves more. You know help ourselves first. We have a lot of people that are working and not able to make enough to make it with a family and buy a home and car and the things they need.

 

[Chuck52]

Not to your post specifically, pruntyc, but to the general topic:

Mark Twain said:

"Get your facts first, and then you can distort them as much as you please."

Aside from the direct meaning, I suspect he, as a supremely cynical thinker, also understood the definition of "fact" to be itself a variable, especially as applied to any purported "fact" involving economic statistics or human endeavors in general.

Bird's definition of economics is probably more useful than anything put out by the government or the media. There were even many folks for whom the Great Depression was something which was happening to other folks.

Chuck

 

[Libertine]

bigpete:

You sort of see it. But the problem isn't with banks themselves. It's with the very nature of the money being used. The system operates with debt money, more precisely monetized debt. In other words, every single dollar you, or I, or anyone else uses came into being because of loans from the banking system, and, more basically, the FED.

Omitting the details (reserve requirements, etc. etc.) when a bank "lends" you $100 you spend that into the system. The bank creates a debit entry (your IOU which is the banks asset) and a credit entry (usually into your checking account) At the end of the year, $105 (or whatever) is owed. Now you, or I, can get back the $105 and pay the debt, but the system as a whole CANNOT since there is only one source. Put simply, the entire economic system of getting and spending (money) absolutely REQUIRES a continual expansion of debt in order to avoid a reduction in money supply and hence collapse (such as happend 1929-1932). Issues such as recession. boom and so on are smoke screens and/or effects of efforts to fine tune the debt level to account for items such as monetary velocity (how fast money is changing hands) and so on.

It is absolutely necessary for the over-all debt to continue to grow under this system, at least fast enough to cover the interest rate burden on the total money supply. If you think back a few years there were big "surpluses" in tax revenue and talk about "paying down" the US debt. Absurd since a large portion of the money supply is US debt. If that happened, tax revenue would remove spending from the system. When it was "paid back" to the banking system (FED) it would extinquish that portion of the TOTAL debt, and hence total money. The current "deficits" will help keep the system from collapse for a bit longer.

You are absolutely correct regarding the issue of personal wealth accumulation. The reason is that people think in terms of units of money (monetized debt units) and not reality itself, i.e. how many ounces of gold do you have, acres of land, etc. They think they are better off because their 2500 sq.ft. house has "gone up" in monetized debt units but often not when measured in replacement cost thus they are actually going down hill without even realizing it. When "easy credit" is added in they are much worse than they realize. But the debt has to keep growing and growing and growing to keep the system afloat. Most people today are indentured servants laboring away their whole lives just to get enough monetized debt units to repay previous debts.

How, when will this system collapse? Can't say. I hope it lasts out my lifetime. The people I feel sorry for are those with kids. They have no idea of what's coming.

JEH

 

[fivestring]

Very good look into reality.
If people don't believe it, they should go into their bank and tell the mgr. they are closing their account. The bank only cares if you have loans or credit card debt. Banks do not make money on your deposits. They don't care if you have $100,000.00 in the bank, if you are borrowing from them, you're not making them any money. They make money on your loans ... all comes back to the golden word -- D E B T.
Like the Lending Tree commercial says, "Help me, I'm in debt up to my eyeballs". That's a lot of folks saying that -- 2 paychecks away from bankruptcy.

 

[cowboydoc]

"Banks do not make money on your deposits."

Sure they do. They use this money to make other investments and loans.

 

[pruntyc]

I liked what I read one time. The man wrote, that we don't really own anything, the gov. does. He said just don't pay you rent "I mean taxes" and see who really owns it. It makes sense to me, because I think he is right. /forums/images/graemlins/smile.gif

 

[fivestring]

<font color="red">"Sure they do. They use this money to make other investments <font color="blue">and loans." </font> </font>

They don't make hardly any money off deposits. They make money off the loans (personal, business or credir cards).
They try to invest money just as we do. They also lose money, more than we do. They write off bad loans and charge-offs (unpaid credit cards and such) up the wazzooo. That's another reason they charge fees, to help offset the losses.
That's why they don't pay you squat for interest... because they don't make squat for interest when they try to invest. On the other hand, you borrow from them and you pay 8,9,18% interest and they make all the profit (money) from you.
My wife works at a credit union. That topic is brought up a lot in their meetings. I also did not know this stuff about financial institutions. I was like you, thought my deposits were money for them. When folks close out accounts (ten of thousands of dollars) the credit union doesn't even ask why unless there is an outstanding loan balance or charge card balance. That is the bread and butter of financial institutions. Why do you think there are so many mortgage companies, lending companies, and all financial institutions offer charge cards? It goes hand-in-hand with not having any credit history is as bad as having bad credit history.
This again, I did not know until she told me.
We need to own banks, mortgage companies, insurance companies and media outlets.
These are your power forces in the world.

 

[Libertine]

cowboydoc:

<font color="blue">"Banks do not make money on your deposits."

Sure they do. They use this money to make other investments and loans. </font>

Actually, this is partially true, but not for the reason you may think. Imagine you are a bank. You have NO depositors. I want to borrow $100. You create a debit entry on your books of $100 (my note - your asset) and a credit entry on your books (my account - your liability). Now the FED has certain "rules" on how much you can create (lend). I'm not sure of the current ratio, but it used to be around 6:1, i.e. the total amount of new debt money was around 6 times the amount deposited with the FED - this 6 times distributed amoung the various members of the banking system. (That's why it's called "fractional reserve banking"!!!) The real benefit of you (your bank) having deposits is that you can pass those deposits on to the FED, let them hold it (actually, they don't hold anything, just a bookkeeping entry showing a liability to you offset by the FED's debit - asset - entry), and they will let you lend out a certain multiple of that (as I said, don't know the current multiple).

But you have to be a "member" of the club to do that. Fivestring's mention of mortgage companies, savings & loan companies (are they still around?), etc. isn't correct, or, at least they didn't used to be a "member" of the credit creating club. All spendable debt money originates with banks (ultimately the FED), which is why if you look at credit cards you will note most are issued by banks. If you, or, I, issued our own credit cards we would have to have offsetting deposits, or, we would have to pass our asset (the cardholder's liability) on to someone who could create the debt money. It is difficult to grasp, because we all have to work for, give up something to get, the "money" we use (spend, save, etc.) therefore there is an inherent psychological reluctance to understand that what we are actually working for is someone else's debt (except for a very, very small monetary "base" that doesn't circulate anyway).

Perhaps my explanation isn't very clear. You might want to discuss it with someone higher up on the banking food chain who will be frank about it with you and can explain it more clearly than I. Every dollar you (or I, or anyone else) has, is someone else's debt. Think about the implications of that. Then it will be clearer why I said that overall debt in the system HAS to keep growing and growing and growing just to keep the thing afloat. The only way it can end is a collapse of the debt system with wages going back to a few dollars a day, prices falling and falling and the holders of the debt liquidated out.

JEH

 

[cowboydoc]

Reaper,

Yes this is exactly what i was talking about. You have to have assets in the bank to be able to have a foundation from which to make loans and credit cards from. Like you I don't know the exact science of it but it does depend on how much money you have in your bank. That's why banks do cds, money market accts., and minimums on their savings and checking accts. This helps them assure that they have their minimum amount of funds at all times.

 

[fivestring]

"it does depend on how much money you have in your bank. That's why banks do cds, money market accts., and minimums on their savings and checking accts. This helps them assure that they have their minimum amount of funds at all times."

And that minimum being for loans so they can make money. If financial institutions couldn't loan money, most would go out of business. How many of us could pay cash for a tractor? Most folks finance them. Tractor sales would probably drop 50-75% if folks could not borrow money to purchase them. John Deere credit does more than tractors, too. One of my bass boats was financed through them.
I wonder how long our society will last on borrowed money... It's really kind of sad that most folks are just a couple of paychecks away from bankruptcy.

 

[Libertine]

cowboydoc:

<font color="blue">Like you I don't know the exact science of it . . . </font>

tish tish . . . I could say that sounds a bit like ad hominem, but I won't. I will say what I said in the post, to wit: perhaps I didn't do a very good job explaining it - that's my fault, not yours.

The fact that the entire economic system is based on using debt, which originates in a single source, as its medium of exchange (money) is something of such enormity that it is difficult to grasp as well as the implications. It's certainly difficult to explain. Like I said, maybe I didn't do a very good job trying to communicate it. That doesn't mean I don't understand it.

One of my many failings in life is to try to put concretes (such as this thread Recession? Inflation?) in a broader context. Ah, well.

JEH

 

[Libertine]

fivestring:

<font color="blue">I wonder how long our society will last on borrowed money... </font>

I wonder too. Hopefully until I die anyway. The head of one of the FED Banks told an aquintance of mine (he had helped them develop the clad coinage to work in venting machines when they started counterfeiting US coins in the 1960s) in the early 1970s that they thought they could hold it together until about 1980. If you recall your history they came close to losing it at that time. But they are pretty smart fellows - I have a tremendous respect for Greenspan. I hope they can keep it going until after I'm dead.

JEH

PS fivestring, thanks for your kind remark in another thread.

 

[MikePA]

<font color="blue"> tish tish . . . I could say that sounds a bit like ad hominem, but I won't. </font>
But you just did.