Posted on 11/18/2007 7:21:16 AM PST by Huck8119
---Harvard Economic Society, October 19, 1929
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
~~Ludwig von Mises
I have ever been the enemy of banks, not of those discounting for cash, but of those foisting their own paper into circulation, and thus banishing our cash. My zeal against those institutions was so warm and open at the establishment of the Bank of the United States, that I was derided as a maniac by the tribe of bank-mongers, who were seeking to filch from the public their swindling and barren gains.
~~Thomas Jefferson to John Adams, 1814
Like a dropsical man calling out for water, water, our deluded citizens are clamoring for more banks, more banks. The American mind is now in that state of fever which the world has so often seen in the history of other nations. We are under the bank bubble, as England was under the South Sea bubble, France under the Mississippi bubble, and as every nation is liable to be, under whatever bubble, design or delusion may puff up in moments when off their guard.
~~Thomas Jefferson to Charles Yancey, 1816
On average no it is not since they are selling into the same market they are buying from and in the process lose the 6% brokers fees off the top + transaction costs, plus moving costs.
Their interest rate might be slightly better today than 1 years ago, but not better than 3-5 years ago and more, and anyway. Besides, that is a more complex way of just refinancing, and todays rates are not that attractive (there is a large spread between 15 year mortgage rates and 10 year treasury rates if you haven't paid attention).
I wonder where the tipping point will be.
I’ve come to the conclusion that almost no economists actually know what the F they’re talking about.
We’ve been in this house for 30 years, and the one next door for another 20 plus years, so we are pretty much tied down to living here. My wife has been on the staff of the same church for 25 years and it would take an explosion of some sort to get her to move away from our three kids and six grandchildren.
This area has not been hit by a hurricane since 1928, but we are sharing the cost for the season before last when Florida really took a beating.
I am recently retired and our income has fallen so we’re really not in a position to refinance our home right now.
I noticed yesterday that I paid $2.19 for a loaf of bread that for the last 10 years has been $1.49.
It seems to me like at some point the economy is simply going to exhaust its ability to absorb higher and higher prices and the collapse will be pretty quick and quite nasty.
Next time you’re in the grocery store look at how many people are using credit cards to pay for their groceries. Same with a restaurant. We use plastic but it’s a debit card and comes out that same day.
I have no desire to be a doom and gloomer, but I just don’t see how the economy can tolerate $90 plus a barrel for oil and something not have to give way in people’s budgets.
Our homeowner’s was $900 a year, jumped to $1,500 a year ago and this year is $3,600. We have not gotten the bill for renewal, that’s coming in January.
LOL I agree. Economics is anything but an exact science.
Many people, including myself, pay for groceries (and darn near everything else) with a credit card. The thing is, many of us pay the entire card balance every month. The credit card is just a better way of not having to carry cash, AND we don’t get dinged with transaction fees as you do many times with debit cards.
Some people yes, some no. And anyone paying 6% still in broker fees is on crack—especially if you are buying with the same agent (can get as low as 4% even with a ‘normal’ broker). And again you are still talking about their net worth—I’m talking about their net monthly expenses. Most people who have no or little equity/savings care more about month to month expenses. If you go from having “20k” in equity on paper to $10k but monthly mortgage/property tax expenses drop by $400 a month—that person will probably spend more over the next couple of years than otherwise.
Take your $1.49 bread example though--at 3% interest over 10 years it would be just over $2 a loaf which is about where it is for you now. We haven't seen bread prices rise that much. Dairy has been the biggest increase with grocery items second. Some produce items were a lot higher this year (like oranges) but that was mainly due to crops being destroyed in storms/draughts/etc.
Florida home insurance is a bad measure for the country though. It was too cheap for years--partly because of state law--and the insurance companies were losing money off Florida. Now they are having to make up for those years where they lost billions.
A lot of people also get 1-5% back at the grocery store on their credit card (I get 2% back). Of course, the credit card fees are high for the merchants like us (we paid around $8 million last year in fees on about $400 million in credit credit sales). Another positive for the consumer is if you have a problem with something, it's a lot easier to guarantee your money back on a credit card than a debit. Checks & cash are almost impossible once processed/lost.
Your trade deficit funded by inflation at work. Vote out all the ‘free traders’.
Agreed 100%. I get 5% back on gas, 1-5% on almost everything else, and the convenience of having a 3rd party intervene to settle disputes is invaluable.
About 4 years ago I bought 22 computers off the Internet - known merchant - for my business. The first 16 were great, no issues. The last batch of 6 were - well, let’s just say they were unusable for several reasons. When I tried to return them, the vendor balked. So, I just contacted Visa, sent them a letter describing the problems and pictures of same, and let them take over. I won, and it saved me $9k.
I keep one card in my wallet and a different card for all Internet/catalog purchases, and that system works really well for me.
The one expense with credit card that sucks this year is PCI Compliance. It's great for the consumer for cardholder protection but it's costing us way more than even a massive credit card breach would. Of course starting in January, if we have a massive credit card breach, and aren't following PCI, Tier 1 & 2 merchants will lose their ability to process credit cards.
I believe the high gas prices will be the tipping point. A natural diaster or a man-made one is all that is needed. A gas shortage or $8.00 a gallon gas will start a ripple effect that will see a chain reaction of business failures and deep recession. Thank you environmentalists.
What is PCI ?
I hate to sound like an alarmist, but it seems to me our economy is in a state of delicate balance at best. There are any number of events that could upset that balance in a heartbeat. And there are other situations that we haven’t even thought of yet. This thing with Pakistan or the Iran thing could trigger a series of bad events for our economy.
Payment Card Industry. Just google PCI Compliance if you are interested at all. It’s pretty boring but all major retailers are having to be done by Dec 31st.
If you had put $$900 a year in a bank account for 20 years, you would be self insured. I saved and I don’t need a stinking insurance company.
“I fail to see a recession around the corner. A slowdown is likely (unless exports continue to boom at will) but there is no evidence of a recession on the near horizon.”
I agree how a magazine called “The Economist” can be so clueless I don’t know. As the massive trade imbalance dissipates, $700+ billion/year will be added to the $13+ trillion US economy. The US will finally get to profit from decades of currency manipulation by foreign countries, who did it for short term trade advantages.
I don’t dispute your post, but would point out that life doens’t always turn out the way we plan, and it takes some of us longer than others to get our act together. Like my Mom used to say, “Life is what happens when you’ve made other plans!” Amen.
We consider ourselves truly blessed by God to have reached this point in our lives and be as far ahead as we are. Of course we regret not growing up sooner, but it just wasn’t in the cards.
We have lots of friends, and family, who had it early on in their lives but now are having to pay the piper. We kind of feel like you have to pay the piper at one end of life or the other. We’re grateful we did the heavy lifting when we were young!
I admire and congratulate you on your planning and saving. That’s the way it should be. Thank God that’s not the only way it can be though.
We talk about it from time to time and agree that we would do it all over again if we had to!
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