1. Same story, different day...........year ie more of the same fiat floods the world
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Ramblings

Discussion in 'Topical Discussions (In Depth)' started by Scorpio, Feb 5, 2014.



  1. FthePolice

    FthePolice Seeker

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    I'm scratching my head about the debt is wealth thing. Just from a personal level I was swimming in debt for years. I somehow maintained a great credit score because I paid my bills. All the while I am getting nailed with interest. Three years ago I changed my evil ways and decided to get out of debt. Now I am on a role and completely out of debt. My net worth is soaring compared to what it was. Being debt free and not paying Banksters interest is an awesome feeling. I guess if you are really wealthy some debt doesn't really hurt you at all. I am not disagreeing with you guys just struggling to wrap my head around the concept.
     
  2. Joe King

    Joe King Gold Member Gold Chaser

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    Problem is, to a large degree, the gov is its own creditor. All the funds borrowed from the Trust funds make up at least 30% of federal debt and much more of it is owed to State govs, pension funds, mutual funds, insurance companies and banks, individuals, government-sponsored enterprises, brokers and dealers, trusts and estates, corporate and non-corporate businesses.
    Ie: "only" about $6trillion is owed to foreign entities. If the gov decides to only screw us over, (citizens) they could make interest payments to foreign entities for a long time to come.


    Granted. It will reincarnate into a different form.
     
  3. Joe King

    Joe King Gold Member Gold Chaser

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    Now you need to go the next step by acquiring other peoples secured debt.

    It's debt that extinguishes itself that is the only kind worth going in to. Otherwise you're just borrowing from your own future earnings to spend today. Ie: in most cases you'll be poorer in the future for having done it.
    ...and can you wrap your head around the idea of getting checks in the mail? That's how one mans debt turns into another mans wealth. When one is mired in debt, that's the only side of it he can usually see. Ie: that he owes, he owes, so off to work he goes.
     
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  4. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    Yes, they are included in the "too big to fail" group. But they serve the creditor.

    Since the gov't serves the creditor, the creditor will convert it into tyranny at behest of the creditor.

    This is why so many POTUS's have been shot or attacked (including the one in my avatar) when they tried to pull the plug on the central financing mechanism. With ONLY gold and silver as money and with no central bank to loan the gov't fake or rather fiat money, this forces the gov't to remain within budget or issue their own bonds directly when in times of war or severe hardship. No longer a slave / master (debtor / creditor) relationship.
     
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  5. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    The way the monetary system is structured, a very wealthy person can use leverage in an uneven playing field. The field is uneven for a number of reasons. Some are simply due to the way leverage in a capitalism marketplace system works and other natural factors, But much of the uneven playing field is due to the dishonest money and the dishonest systems created because of the dishonest money. Over time, the playing field can easily become more and more dishonest and uneven.

    If you don't have a lot of credit and can only borrow to consume things, like cars or food or furniture or school or whatever, then debt is going to come with a lot of downsides which are often detrimental to your financial health. Maybe the car will get you to the school and maybe the school will teach you a great skill and if that all works out then eventually the pay back may have been worth it, to buy the car and go to the school on borrowed money.

    But credit and debt can be put to use for production and for leveraged speculation. If for example, you know that the stock market is going to go up for several years you can buy stocks with the money you have and also buy at least as much again on your credit worthiness, thereby expanding your gains as long as you sell out the leverage prior to losses or the dreaded margin call.

    If your credit worthiness allows you to buy a house on credit then instead of paying rent you may (depending on where and other circumstances) be able to pay your mortgage payment with the same amount of monthly income. Once the house is payed off (usually 15 to 30 years) then you own the house and it was a good way to use debt. In addition, if the house sees appreciation then you will get all of those gains when/if you sell. However, payment structures are not in your favor if you sell too early or refinance incorrectly.

    A very wealthy person can also use their credit to borrow for example several million dollars and start a factory. As long as the factory can pay back the debt plus the interest, then after some number of years when that's done, the wealthy person owns a million dollar factory which they created using someone else's money. Not only were they able to do a lot more things with their wealth this way, increasing their net worth much faster than the average person can but they were in some cases able to do it with less risk.

    For example, there are safety nets, golden parachutes, and bankruptcy options. Some big wealthy businessmen have used leverage to make a lot of money while others have taken on the risk and when things didn't work out for the new business (often because of over paid salaries to the new business's original founders) bankruptcy laws have allowed the debtors to walk away scott free and keep a lot of the previously received gains while the endeavor was still underway.

    In general, if you can't borrow very much money at all, going into debt is usually not going to help you and can often hurt you.

    But the more you can borrow to do something worthwhile with funds which you're certain what you plan to use for will be worthwhile, then the better chance you have at making a debt work out for you. And if some activity works out and makes you money, and you can scale that (do it again or two times at once or maybe even more) because you have a lot of available credit, then of course you'll get a lot more wealthier, faster.

    Most people don't understand how the rich get richer. They often mention CEO pay when that topic comes up. However, there's really not that many CEOs out there in the world. Most rich people are not CEOs and most rich people get richer by using debt.

    Things will eventually top out for a rich person at some very high number, usually in the tens or hundreds of millions of dollars as overcapacity and other factors come into play - but that's a related topic which there's no real need to go into as not too many people will ever experience this condition first hand.

    In an honest money and non fractional reserve system, savors with less access to credit are still rewarded for their hard work and can more easily build credit. Good ideas become the test to see who is rewarded with access to more credit, instead of who has the most credit to begin with. But this is a different topic altogether.
     
    Last edited: Feb 10, 2018
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  6. FthePolice

    FthePolice Seeker

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    Thanks for taking the time to spell it out for me FM. Very educational. I guess my house is the only thing that applies to me personally here. Down the line, there will be more opportunities to buy a second house or land.
     
  7. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    Yes all the while John Doe's bones are feasted on by 401K vultures, housing, auto & credit card debt.
    In a rigged system banksters don't loose because they always know the next move before THEY make it.
    When the game is rigged it's easy to fleece the sheeple.
    Note how the market tanked AFTER year end bonus checks were issued & cleared.
    Note how everything goes down dollar, precious metals, crypto's. Joe paycheck is forever F'ed!

    1 mil used to be the American dream. Work hard, live frugally save, invest & next thing you know your sailing off into retirement with 50K-70K in annual CD income.
    Huge amount of baby boomers doing that so they could not let that happen. Enter zero interest rates. Enter stagnation so you can't give your business away because it exists,
    bills and employees are paid, lots of cut backs and belt tightening, but it's not profitable to the point of selling it. You could take it over and continue for it to exist but not make payments on it.

    Face it boys it's a rigged system & we ain't in it. In hindsight it was obvious how we were set up. Going forward we still can't see we should be here or there or, where?
    We should have all sold everything with $49 silver & $1900 gold. We should have sold houses in 2006 and bought them back a short time later for 25-75% less.
    We should have invested in long term bonds when rates were good. We should have bailed on the market before the crashes & bought back at the bottom.
    But sadly we can't. Even guys like Buffett with inside knowledge may get a piece here and there but not like the banksters who we bailed out.
     
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  8. FthePolice

    FthePolice Seeker

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    @Uglytruth

    I don't understand "401K Vultures". Can you expound?
     
  9. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    He did say in the video that there is a difference between Gov and personal debt. personal debt sucks. The more Gov debt you have the higher the GDP.. I imagine thats somewhat accurate as long as there is continually a new flow of ever increasing debt, borrowed into the system.

    To answer scores question of where the money went in the stock market, an argument could be made that it was never there. Just like fiat currency, stock market valuations exist on confidence only. Someone buys a stock at 10 dollars because they are confident that it will increase in value over time. for many reasons.

    Lets say I buy 100 shares of XYZ corp at 10 bucks. I put 1000 into it. 5 years later its worth 100 bucks a share or 10,000. Now i didn't invest 10,000 but thats what its worth today because 1 person bought 10 shares at 100. There could be 100 million shares issued at 10 bucks and because 1 person paid 100, all 10 million are now valued at 100. Of course if you sold all 10 million at once the value would probably drop to below 10 bucks so whats the stock really worth?
    Nowadays you also have to factor in 401k's and the rules the money managers have to follow and imo it skews the real value of the market. For instance any wage inflation in the US will result in more 401k contributions. When you get more 401k contributions the market will inevitably rise. IMO it's a complicated casino to play in. The high frequency computer trades also skew things and IMO they shouldn't even be allowed but the sheep could care less obviously. They trust their most important retirement next egg to someone they have never met before. Insanity if you ask me.
     
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  10. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    Imagine your business is investing / banking / money. Offer a new retirement concept called 401K where " financially ignorant people" are in control of "their own money". What most did not realize is it let businesses off the hook for legacy retirement costs. Helping businesses drive up their stock price.

    If you have a business with 100 people making in 1980 say 30K yr & that hundred people sent in $2500 a year to contribute to their retirement. That's 250K out of one small business. Ask yourself where does that money go?
    It drives up the market right? Gotta go somewhere. A investing professional would understand that. Besides they know the numbers. How many workers, what they gross, what % will go in the market, daily, weekly, monthly, annually.
    They have the leading indicators. If inflows slow they know it before anyone. Loss of inflows means working less hours or wages reduced or layoff's. Balance that with unemployment numbers & you know the direction of the overall market is heading.
    Funny you were always forced to put a % of income in and not a fixed dollar amount.......... think about it.............

    In every good hustle / ponzi scheme excitement breeds excitement & people start putting more and more in. Think Bernie Madoff. Word of mouth takes over and "hey, my guy" made me 15% returns you should talk to him. Get a check every month like I do. All those funds flowing into Wall Street banksters it was like taking money from a baby. Few knew about expenses and fees and lots of fees were hidden. Lots of businesses had very limited investment options & a company I worked for even got a kickback on invested funds. Our returns were less than money market accounts were returning with a LOT more risk & fees. I got the information we were allowed to see, questioned things & it helped lead to getting fired. I asked some questions & it went like this. Why do you want to know these things. Who's money do you think it is? My response was it's my money I've been here over 5 years & am fully vested. He turned and walked away. You don't question business owners. But in reality he was right. It might have been my money but he was getting residual kickbacks off of it. Kinda nice kickback getting even 1% off of a plan with 8 mil in it.........

    Where do you think all these massive bonus's came from? Simply ask yourself this........ If 401K's are so great why do all these CEO's get paid up front & when leaving with golden parachutes instead of wanting a pension? Simple. They know it's a rigged system & want paid up front. Al the while the workers get golden handcuffs...........

    The trick isn't getting into something, it's the timing of when to take profits get out that locks in profits......... think age demographics.
     
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  11. FunnyMoney

    FunnyMoney Silver Member Silver Miner

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    Timing is key, both on the buy and sell sides.

    What you're experiencing is the difficulty in calling the tops. This is to be expected because with most assets it is easier to pick a good entry point than an exit.

    Take gold for example, there are relative floors. Unless the mines start using slave labor or unless the input costs go down like oil going back to 20 then when the price gets close to the input costs there is a level of assurance that you're near the lows because if it goes below the cost to mine then some mines may halt or slow production which will then change the supply/demand fundamentals and push the price back up.

    For gold going to MT or LT tops, this is much harder to figure out. Factors like "will it return to be used more as money;" "will people still buy lots of jewelry at these high prices" and many other more difficult to pinpoint factors are involved.

    The opposite is true for bitcoin recently. I was able to call the top in bitcoin because it was clear 20k was not sustainable due to the required new buying that would require. Not everyone in the world is going to want to own tulips and if they own one already, wondering why, they're certainly not going to want to own some more of them. And it was clear that the adoption rate of the technology would in no way be able to keep up with prices moving higher.

    But the bitcoin bottom is going to be much more difficult to call because intrinsic value is near zero yet any small moves in adoption rate or interest in it as a store of wealth will make a big difference in terms of what is the low points. Again analysis of the factors is more difficult.

    For most of the assets that people buy, good traders will typically wait to see a top and then as the price pulls back try to figure out if this is now it for the medium term or not and sell on the way down hopefully earlier than the next guy. Re-tests and many other TA factors are used as well.

    Back to debt, specifically gov't debt, it is a game being played by the CBs. There's no good reason the gov't takes on debt coming from them and their totally fiat and fully controlled money. The game is for making the elite owners of the world richer and securing their control over the world. The revolutions against them, hundreds of years ago, have essentially been lost. If the Founding Fathers were alive today they would be aggressively recruiting for a new revolution. The recent "walk thru" of ft knox and the day the laws of physics were suspended are some of the first doors leading into the room of tyranny.

    Remember the show Get Smart? Remember all the doors he had to walk through as the show started? We've walked through at least half of those doors. They've been locked behind us and getting out of here isn't going to be easy. Given the way education and control over the populations is, it may not even be possible.
     
    Last edited: Feb 10, 2018
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  12. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    First thing you must understand about .gov debt is where it comes from. The $16 tt of U.S. Treasury bond debt is evidence of the amount of credit & fiat that has been borrowed from the U.S. economy, banking system & foreign investors.

    The problem with the scheme arrives when the demand for new credit & investment by .gov is greater than the market system can produce or provide. .Gov can create as many bonds as it likes, its credit is unlimited, but it comes at a cost when a disequalibrium arises between free enterprise & .gov, namely .gov begins allocating greater & greater percentages of GDP to itself for political purposes, which essentially prevents the economy from expanding & growing. In other words there are limits to the gross amount that .gov can allocate for its legitimate & illegitimate purposes from the general economy. Whenever it allocates or it confiscates to much to itself, it causes disequalibriums & scarcity in the probate business sectors. When this occurs, businesses fail, unemployment & bankruptcy rises....

    Its what happened to Venezuela, etc. et al when they took to much for political purposes it destroyed their economy resulting in hyper-inflation & market collapse.
     
  13. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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  14. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    From Deutsche Bank:

    Blame the dollar on yields

    We are well into 2018 and our feedback from recently attending the TradeTech FX conference in Miami is that the market is still struggling to understand or embrace dollar weakness. How can it be that US yields are rising sharply, yet the dollar is so weak at the same time? The answer is simple: the dollar is not going down despite higher yields but because of them. Higher yields mean lower bond prices and US bonds are lower because investors don't want to buy them.This is an entirely different regime to previous years.

    Dollar weakness ultimately goes back to two major problems for the greenback this year. First, US asset valuations are extremely stretched. As we argued in our 2018 FX outlook a combined measure of P/E ratios for equities and term premia for bonds is at its highest levels since the 1960s. Simply put, US bond and equity prices cannot continue going up at the same time. This correlation breakdown is structurally bearish for the dollar because it inhibits sustained inflows into US bond and equity markets.

    The second dollar problem is that irrespective of asset valuations the US twin deficit (the sum of the current account and fiscal balance) is set to deteriorate dramatically in coming years. Not only does the additional fiscal stimulus recently agreed by Congress push the fair value of bonds even lower via higher issuance and inflation risk premia effects, but the current account that also needs to be financed will widen via import multiplier effects. When an economy is stimulated at full employment the only way to absorb domestic demand is higher imports. Under conservative assumptions the US twin deficit is set to deteriorate by well over 3% of GDP over the next two years.

    The mirror image to all of this is that the flow picture into both Europe and Japan has been improving dramatically anyway. We have previously written about the positive flow dynamics in Europe as the flow distortions caused by extremely unconventional ECB policy are starting to adjust. But the Japanese basic balance has also shot up to a 4% surplus in recent years helped by a big improvement in the services balance (Chinese tourists) and a collapse of Japanese inflows into the US: treasuries simply do not provide enough duration compensation any more. To conclude, embrace dollar weakness, it has more to run.
     
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  15. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    'Fannie Mae incurred a net loss of $6.5 billion in the final quarter of 2017 and announced Wednesday it is in desperate need of a taxpayer bailout.

    Fannie Mae said Wednesday the Federal Housing Agency (FHA) is seeking a $3.7 billion infusion of taxpayer money from the U.S. Treasury to make up for the loss, which reportedly stemmed from the changes Republicans made to the corporate tax code.

    http://dailycaller.com/2018/02/14/fa...payer-bailout/
     
  16. BarnacleBob

    BarnacleBob GIM Founding Member & Mod. Founding Member Site Mgr Site Supporter

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    Banks unfairly deny mortgages to African-Americans and Latinos - report

    https://www.rt.com/usa/418932-banks-deny-mortgages-african-latinos/

    Why arent Banks lending to AA's & Lats? They have bad credit reports!!! WHY is FNM in trouble again....??? They loaned mortgages to people with bad credit reports! Duh....
     
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  17. madhu

    madhu Silver Member Silver Miner

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    But but in order the debt bubble to be sustained the lending has to be given to anyone and his dog who is breathing? Debt bubble has to be replaced with electron bubble and you can have quadzillion or whatever insane number you can conjure up. Why only the rich should get all the debt? It's not that I want cheats to game the system. I just don't want penalizing farmers for a 1000$ loan and killing him with the tractor that he owes the money. It should be fair and equal punishment.
    https://www.ndtv.com/india-news/up-...tor-allegedly-by-loan-recovery-agents-1802981


    We realize that the markets are rigged and manipulated so much that genuine people are being crushed with loans and that the collection process should be fair and just. The state cannot harshly use its power to collect for the benifit of the private banks.

    Another dead beat diamond merchant in India fleeced the bank for 11000 croresof rupees , 1.7 billion us dollars The clamor for block chain cryptocurrency gets louder. It looks like demonetization has not fixed the cheats and corrupted bankers and their politician friends.
     
    Last edited: Feb 16, 2018 at 11:20 PM
  18. Area51

    Area51 Silver Miner Seeker

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    Auto loans have become the new sub prime mortgage loans.

    A brilliant little tactic - - why lend the peasants money to buy an appreciating asset when you can lend them money to buy a depreciating asset?
     

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