[nek]

This a bit of a U.S.-centric question, but feel free to chime in (our household debt in the U.S. is outrageous). What would happen to the economy? Would things be great or is the system reliant on debts?

[GameNovice]

(11-14-2015 03:20 PM)nek Wrote:  

This a bit of a U.S.-centric question, but feel free to chime in (our household debt in the U.S. is outrageous). What would happen to the economy? Would things be great or is the system reliant on debts?

If I am the only person on the planet who can create money and you borrow $100 from me, how are you ever going to pay me back the $105 you promised to pay me unless I agree to create more money for you?

[eradicator]

This is a bit like saying "what is manna fell from heaven and hungry people never had to worry about their next meal?"

We live in a consumer culture, people spend money they don't have because advertisers tell them they want/need things they cannot afford so people buy them anyways. I'm guilty of it to, to some extent(I have no debt, but sometimes want to buy something because it looks like something I would enjoy, and I don't really need it). I don't see how this culture will ever change.

[nek]

(11-14-2015 03:27 PM)eradicator Wrote:  

This is a bit like saying "what is manna fell from heaven and hungry people never had to worry about their next meal?"

On the surface, yes, it might look like that. What I was trying to get at more is how dependent our economic system is on people being in debt (i.e. the banking industry, perpetual "growth").

[WestIndianArchie]

Consumer money would flood deposits.

Lenders would be looking for places to use that money, and would probably offer better terms to established big businesses or real estate plays.

But those savings had to come from somewhere, probably consumption. You'd have a general pull back of demand.

If that money shifted from buying suv's, Starbucks, and iPhones - those businesses would suffer. They would have to drop prices.

those businesses would probably have to cut down on production. Which means jobs of course, but also a reduction in business to business services and purchases. So chain effect job loss.

Declining economy also means a drop in population.
It's funny a place can be poor as all get out, but make it worse and the fertility drops.

WIA

[Grange]

Living standards would stagnate? Do you expect people to buy houses only when they've saved up the money for the whole purchase?

[Chauncey]

(11-14-2015 03:20 PM)nek Wrote:  

This a bit of a U.S.-centric question, but feel free to chime in (our household debt in the U.S. is outrageous). What would happen to the economy? Would things be great or is the system reliant on debts?

I'll play along. To pay off these debts there would have to be an equal reduction in spending and saving/investing. Less spending leads to less demand leads to less supply leads to less jobs, leads to less spending, rinse and repeat.

Less saving/investing leads to less capital available for firms to expand production and/or technology. Lower production and fewer technology developments would lead to lower profits, which would lead to fewer businesses.

The US economy is fueled by consumption and credit, without these two the economy would collapse.

Hard to believe I got a degree in economics 10 years ago. I am sure there are fancy theories and terms that describe it better but I have long forgotten everything I learned. You don't use it you lose it.

[SunW]

We have a centrally-planned economy by the central bank, so it's unlikely that would happen as central banks need debt and all money in a centrally planned economy is debt (all Dollars are created through bond purchases).

In a capitalist system (no central banks, no target growth), what would happen:

- Without any debt, people would be able to either consume or save. In a system with no debt, every job created isn't the product of malinvestment, so is completely sustainable.
- Price discovery would be precise because no one would be buying something with borrowed money, meaning entrepreneurs could easily determine how to price their products.
- There would be no massive business cycle bust because no malinvestment from debt or leverage would exist.

For those who say this is impossible, you're simply wrong and you don't understand what money is or how economic systems work. This can and does exist in reality. Think of an economic system with 10 farmers, all who own their land and produce their own food, though each has his own specialty that he produces. None of the farmers have debt and their savings or consumption involves the food they produce and the homes they occupy. What happens in this economy? They all go to war? No, they trade and, if they want to increase their trade, they learn other skills or produce other goods to increase their trade. None of the farmers would need to borrow resources from the others and pay interest, since they all own what they produce and own what they need. Like all other economic systems, though, it would boil down to what they want and if they can control that.

The early Roman Republic (700ish BC) was like the above paragraph.

[wi30]

Nek, you are operating under the assumption that debt is a bad thing.

While debt is bad for personal use (credit cards, personal loans, car loans, etc.), it's crucial for leverage.

In an extremely simplified example, let's say you have 100 grand burning a hole in your pocket. You could buy a house free and clear to rent out. You would have no mortgage payment and nearly all the rent money would go directly in your pocket.

You could also take that 100 grand and buy 5 houses with 20% down. Getting five 30 year mortgages for 100K each, putting 20K down on each house. While the cash flow from each house would be lower than the house you bought free and clear, it's significantly higher since you now have five properties for the same investment. Even if you're pulling 40% on each one compared to the free and clear example, you're still doubling your output. Once the tenant pays off the mortgage, your net worth is incredibly larger than buying free and clear.

The use of debt and leverage can make average guys millionaires. I wouldn't discount it.

[Bazzwaldo]

I'm gonna have a go too but Please correct anything I stuff up. This is how I see it and it may not be how it is

OK, theoretically, banks loan money into existance at interest so in reality, there can't be enough money in existence to pay down all debts within 5 years if for example the loan was set at 10 years (might need some help on clarifying that one). I think thats what Game Novice was getting at
Economies work on the concept of flow, money needs to circulate in order for it to work, the faster it flows (inflationary environment) the government uses monetry policy (management of interest rates) and fiscal policy (tax rates and Government spending) to slow the heated economy e.g banks hike rates and/or increase tax rates. If money flows slowly (contractionary environment), banks drop interest rates to stimulate investment, and invest in infrastructure spending etc so I agree with Chauncey's summary
Wi30's comment is also spot on, leveraged debt is called risk, the higher the risk the higher the reward (or failure)
So the long way around is...there's more to paying off all your debt than meets the eye, leveraging other people's money is good if you like risk

[ElJefe]

People are already saving, but if people saved more, the demand for capital drops, so interest rates would have to drop further. This means deflation.

Deflation gets a bad rap from most economists, but I'm not sure I agree.

The increase in savings COULD lead to more intensive capital investment, leading to productivity growth. It will also lead to decreased spending, but the decrease in spending will not fall uniformly on all goods, so the economy will adjust, and there will be, at least, temporary unemployment, which should revert back to its natural level (around 3-4%), as the sectors that received additional investments will need additional workers.

In real, life there are frictions that prevent this. The question is whether the frictions are natural (market failures) or man-made (for instance, regulation)

[The Beast1]

(11-14-2015 10:08 PM)wi30 Wrote:  

Nek, you are operating under the assumption that debt is a bad thing.

While debt is bad for personal use (credit cards, personal loans, car loans, etc.), it's crucial for leverage.

In an extremely simplified example, let's say you have 100 grand burning a hole in your pocket. You could buy a house free and clear to rent out. You would have no mortgage payment and nearly all the rent money would go directly in your pocket.

You could also take that 100 grand and buy 5 houses with 20% down. Getting five 30 year mortgages for 100K each, putting 20K down on each house. While the cash flow from each house would be lower than the house you bought free and clear, it's significantly higher since you now have five properties for the same investment. Even if you're pulling 40% on each one compared to the free and clear example, you're still doubling your output. Once the tenant pays off the mortgage, your net worth is incredibly larger than buying free and clear.

The use of debt and leverage can make average guys millionaires. I wouldn't discount it.

While true, this only occurs when cheap and easy credit is available.

In the future, I doubt this will be able to occur anymore. The over leveraged will be the first ones on the foreclosure block.

The days of cheap and easy credit are coming to an end and it's a good thing.

Deflation isn't bad for anyone but the fools who are over leveraged and in debt (the people who are using it to become easy millionaires). Once the wave of deflation passes investments and spending will start again. However this bothers the monied class and PhD'd economists who think they can control market cycles.

[Foolsgo1d]

If everyone paid their debts back I'd open up a stall selling rope in the City of London for all those depressed bankers.

[tynamite]

We live in a Fractional Reserve system. Money is debt. If there was no debt, nobody would have any money. It sounds crazy but the person who created the system is a genius.

There was another cartoon explaining the money system, but the illuminati deleted it off the internet.

Quote:

Honest question.
Where is all the money? I hear nothing but bad news about financial crisis all over the world, and it seems that there is a shortage of cash - like it is some sort of natural resource.
People haven't stopped buying stuff. They still need food, clothing, medicine, shelter. Taxes are still collected. Fines are still levied.
So where is all the money? I mean, labor has been produced to make things and wages paid to the laborers. The things are purchased by other laborers, who were paid for producing goods or services, etc. It's a closed loop, right?
Can someone explain it like I'm five or something?

https://www.reddit.com/r/finance/comment...orld_gone/

You'll also want to read this.

https://www.reddit.com/r/explainlikeimfi...orld_debt/

https://www.reddit.com/r/explainlikeimfi..._its_debt/

Another thing you have to worry about is interest rates. Interest rates set by banks steal all the money in the country (and world), and exponentially give more and more of it to the banks. This is best explained with a diagram.



Imagine that each square is a person with a loan from the bank, and the dark purple circle is all the money that is in the economy. The lines represent the exchange of money from person to person when they buy or sell things. If there is £100 in the country and the bank borrows someone £20 and they have to pay £10 interest, in total they are paying £30 and the bank is profiting £10 for giving away money. So far so good, right? What's the problem?

Well if all the population owes money from the bank, or even 50%, there won't be enough money in the economy to pay the bank back all the money. When a bank sets interest rates, they are not based on supply and demand or competition like the iPhone or Nokia 3210 is. What happens is that there isn't enough money in the economy to pay off the interest. If Alex, Taylor and Kelsey all borrow £20 from the bank because they get paid £40 a week, and there is £100 in the economy, there won't be enough money to pay off all the debts. £40 x 3 = £120. Plus the £30 interest makes it £150. There's £100 in the economy and £150 in debt. The richest country in the world, America, does not have enough money to pay the national debt.

So what happens, they increase inflation in order so there's more money in the economy for people to pay their debts interest rates as you can see from the light purple circle, they can pay off their national debt with the money they've printed, and use inflation to steal money from the citizens by increasing taxes without people noticing. (Allegedly, when people borrow money from the bank, they create the money they loan on the spot, it doesn't come from people's bank accounts, allegedly.)

It's a system designed to screw the 99%, and give complete control to the 1%. Just like how when an american tried to make a currency backed by gold you could exchange for gold, the government put him in prison because restaurants were accepting these gold dollars and exchanging them for gold. They said it's illegal to call something Liberty Dollar as it's confusing to US dollar.

[RoastBeefCurtains4Me]

Tynamite is correct. We have a fiat money system, which means all money exists due to fractional reserve lending. If we went back to the gold standard, this would not be true, but I believe every monetary system on earth currently uses fiat money.

What we are currently seeing in reality is the opposite problem, where debt is increased exponentially, thereby increasing the money supply and creating inflation. US prices remained nearly level on the gold standard, from the start of the republic to the early 20th century, but since we've had fiat money, inflation has caused prices to go up many times. Prices are up 7 times higher from where they were when I was born.

If everybody paid off all their debts, the money supply would contract to zero (theoretically), and there would be massive deflation. With fewer dollars to go around, each dollar would be worth more goods and services. Therefore prices go down.

Generally, government planners hate deflation. It's all a pure hypothetical. The debt will never be paid down. The only plausible scenario based on all of global monetary history is that a fiat money system will eventually blow up with inflation when debt levels become unsustainable.

[tynamite]

To make things worse, the minimum wage keeps being worth less every year, despite how many times they increase the number of the wage you get. The minimum wage increase the socialists working at McDonalds and Walmart are finally getting, is peacemeal change. It's bread and circuses.



[quotes] [more]











Sources:
thread-50253...pid1105993
http://www.economicshelp.org/blog/6994/e...ge-growth/
http://www.telegraph.co.uk/news/politics...ssion.html
http://www.theatlantic.com/business/arch...ey/383338/

The reason why the world is the way it is, is because of jews. Jews control the world. Jews are the real illuminati. Don't listen to anyone who calls you an anti-semitic for saying so.


There was a website called Who Runs The World which lists the CEOs of all the top transnational corporations in every industry. It listed the CEOs of the big media companies, and 90% of them were jews. I bookmarked it and remember the name but I can't find the link. The illuminati took the website down. The media is run by jews.

http://tapnewswire.com/2015/10/six-jewis...lds-media/

The jews own all the media and all the banks. Jews are responsible for world debt. The Federal Reserve is not federal, it's a private corporation run by jews. The american government borrows money off the fed and has to pay it back with interest.

Your income tax goes towards the interest instead of public services. Inflation gets higher, poverty increases, the cost of living increases and money is funnelled from the 99% to the 1% as the interest the government pays to the fed jews, gives the jews more power every day.

"Give me control of a nation's money and I care not who makes it's laws" — Mayer Amschel Bauer Rothschild


The establishment hates Roosh because he goes against the jew agenda (and the cultural marxist and anti-masculinity agenda).

That's why JFK got assassinated. He was going to end the federal reserve but the illuminati jews killed him off so the government wouldn't be allowed to print its own money.

Looking at polling research, public trust in the government died after JFK died. We haven't had a real president since. The american public are morons for voting for jews. Democrats and republicans are the same bloody thing.



Any american who votes should have never of been born, unless you're voting for Donald Trump. They're too concerned about him being sexist, racist and xenophobic - whatever that means.

[BassPlayaYo]

The system ran fine for many years without the wide spread availability of credit that you see today that for the most part fuels consumption and keeps the "bubble" inflated. Compare availability of credit and savings in 1956 to availability of credit and savings in 2016. Quite the eye opener.

Monthly Statement of the Public Debt

[Goldin Boy]

(02-17-2016 12:48 PM)tynamite Wrote:  

To make things worse, the minimum wage keeps being worth less every year, despite how many times they increase the number of the wage you get. The minimum wage increase the socialists working at McDonalds and Walmart are finally getting, is peacemeal change. It's bread and circuses.

snip

You had me going until your posted veered into the "Jewish cabal" talking points which constantly pops up in this corner of the web. It always sound like the person is trying to backwards-rationalize their pre-existing dislike/distrust of Jews, the same way women rationalize their feelings.

For example, that video you posted. Quote me the exact sentence where she said that European Christian societies need to be destroyed because I didn't hear her say that. Ultimately people believe what they want to believe.

Like an arsonists who set a house ablaze and locks himself in it, wouldn't Jews be screwing themselves over by creating all this debt(not all Jews are rich)?

[tynamite]

(02-17-2016 08:33 PM)Goldin Boy Wrote:  

You had me going until your posted veered into the "Jewish cabal" talking points which constantly pops up in this corner of the web. LOL It always sound like the person is trying to backwards-rationalize their pre-existing dislike/distrust of Jews, the same way women rationalize their feelings. LOL

For example, that video you posted. Quote me the exact sentence where she said that European Christian societies need to be destroyed because I didn't hear her say that. Ultimately people believe what they want to believe.

She said "Europe has not learned how to be multicultural". This means that she wants to implement white genocide in white western european countries as white people breed slower than coloured people. Whites are now a minority and London and people feel like a foreigner in their own city.

[Suits]

[Spindis]

Basically nothing would change if people did this. So many conspiracy theories, none of them with any real backing. I don't even think Muslims allow interest. People would just rent things instead of buying them on credit.

(02-17-2016 12:13 PM)RoastBeefCurtains4Me Wrote:  

Tynamite is correct. We have a fiat money system, which means all money exists due to fractional reserve lending. If we went back to the gold standard, this would not be true, but I believe every monetary system on earth currently uses fiat money.

What we are currently seeing in reality is the opposite problem, where debt is increased exponentially, thereby increasing the money supply and creating inflation. US prices remained nearly level on the gold standard, from the start of the republic to the early 20th century, but since we've had fiat money, inflation has caused prices to go up many times. Prices are up 7 times higher from where they were when I was born.

If everybody paid off all their debts, the money supply would contract to zero (theoretically), and there would be massive deflation. With fewer dollars to go around, each dollar would be worth more goods and services. Therefore prices go down.

Generally, government planners hate deflation. It's all a pure hypothetical. The debt will never be paid down. The only plausible scenario based on all of global monetary history is that a fiat money system will eventually blow up with inflation when debt levels become unsustainable.

We were on a gold standard for almost all of recorded history so there is more than enough record to understand what that means for an economy. Basically it means that $ price of gold is stable instead of going up or down all the time so you get none of the effects of that instability.

This idea that if everyone paid off their debts that money supply would change or there would be inflation/deflation has no basis in the historical record.

People who borrowed money now would just shift money back to lenders, who instead of getting steady stable returns would have to take slightly more risk as they purchased properties/cars/whatever and rented them to the people who weren't borrowing to buy them anymore.

If people decided they didn't want to rent anything and pay off all their mortgages or something then the lenders would just have to buy other assets like stocks as the former borrowers would be buying their houses instead of those very same stocks.

If people decided they wanted to pay down their mortgage instead of buying new phones or whatever then that money would just end up in the hands of the lenders who would buy whatever stocks/houses they decided was worth the investment so those making whatever consumer good would just be satisfying the new demand. Honestly the economy changes so fast these days with regard to what people are or are not buying that I see no reason why this would even really cause those changes to occur any faster than they do already.

Everything shifts around slightly but it really does't mean anything. The idea that you would need to buy an office building in order to start or expand a business just means that you would get outside investors who would be investing fully instead of owning the building and charging you rent. Again just a slight tweaking of who is taking how much risk.

About the jews and fed or whatever the previous posts were about.. I duno man, I think they just got off the gold standard because they had no idea what they were doing. That seems to be a very common reason for why things go sideways. It has had a terrible effect on the economy and set us back significantly with a large segment of the economy and profits (banking) being basically worthless. It will be reversed eventually (As it always has in the past) and we'll start making forward progress again but I don't see this grand conspiracy.

[Phoenix]

Governments knew exactly what they were doing when they abandoned the gold standard. Under a gold standard you can't have inflation and monetize government debt. The gold standard should be constitutionality entrenched in the same way free speech is.

The money as debt stuff merely stems from a lack of understanding. The "fractional reserve banking is the devil" crew would do well to google "adverse clearing mechanism" do get a better understanding.

And as for the Jew stuff, why is it always so comical? Like they're cartoon villains? It would be nice to have a calm, mature, rational discussion on their actual power and intentions. But it always attracts a certain type of quack who starts spouting grand conspiracy theories, and posting big nose Jew caricature pictures.

[VolandoVengoVolandoVoy]

The people who were supposed to pay off their loans in a time frame shorter than 5 years would really get screwed with penalties and interest payments.

Also many businesses that give 60, 90, 120 day payment terms to suppliers and partners would go bankrupt.

It would pretty much lead to total economic chaos.

[El Padrone]

Was searching for a different thread on debt/ social security in the context of the US economy and if it is a Ponzi scheme. Anyone find it gimme the heads up.

Meanwhile, this one needs a bump.

[BrewDog]

(03-20-2017 11:57 AM)El Padrone Wrote:  

Was searching for a different thread on debt/ social security in the context of the US economy and if it is a Ponzi scheme. Anyone find it gimme the heads up.

If Social Security were operated by a citizen, yeah it would be a Ponzi scheme and he'd go to prison.

"A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources."

But the government does a lot of stuff that the citizen would go to prison for. What would happen to me if I decided to withdraw a large portion of your paycheck and then threaten to kidnap you at the point of a gun and lock you in a cage for not complying? The law would say that was extortion. For me, the citizen; not for the government.