You know that huge debt that America has been running up on everything from credit cards to mortages? It looks like we're about to have to pay it off.

http://www.msnbc.msn.com/id/21838083/

11/19/2007 3:25:27 PM

glad i don't have any credit card debt

11/19/2007 3:29:56 PM

Sounds like it's a good time to buy real estate.

11/19/2007 3:37:35 PM

If you can get a loan...

11/19/2007 3:41:07 PM

Its only a good thing. People have champagne tastes on a natty light budget.

11/19/2007 3:41:14 PM

It might be a good thing in the long term. But in the short term it's going to suck ass for at least 2-3 years probably.

11/19/2007 3:45:50 PM

http://video.google.com/videoplay?docid=-9050474362583451279

Money is debt.

[Edited on November 19, 2007 at 3:48 PM. Reason : .]

11/19/2007 3:47:49 PM

No, money is an asset in accordance to its value to others.

That someone else acrued debt to acquire the money you now have from someone else is irrelevant to you.

What you mean to be calling 'debt' the rest of us call checkbooks, debit cards, and credit cards. Both are based on a promise of value: cash that someone in the future will accept it as payment, and substitutes are accepted on the promise that someone (a bank) in the future will provide cash.

Either way, the monetary system we have in place is awesome, even if you cannot recognize it.

11/19/2007 4:12:22 PM

Quote :

"What you mean to be calling 'debt' the rest of us call checkbooks, debit cards, and credit cards. Both are based on a promise of value: cash that someone in the future will accept it as payment, and substitutes are accepted on the promise that someone (a bank) in the future will provide cash. "

So what happens if you're owed money from a person that gave it to you in the form of checkbook, debit card, and/or credit card and it turns out the money's not there?

[Edited on November 19, 2007 at 4:18 PM. Reason : .]

11/19/2007 4:18:24 PM

oh, I have a solutions to all of our problems



and then

N.W.O.

11/19/2007 4:28:11 PM

so what does this mean for me? I have some CC debt because I lived off of it for a stretch while I was in grad school, but I'm well on my way towards paying it off.

11/19/2007 4:36:58 PM

What I think it means is, regardless of how good your credit has been in the past, it will be much, much harder to get in the future. And also if you already have debt, your debtor will be much less lenient in allowing you to miss a payment. These banks lost a lot of money because they had their heads in their asses and they're gonna be going after people hardcore to get it back.

11/19/2007 4:39:49 PM

so basically it's going to be harder to get a home loan, etc.

11/19/2007 5:10:28 PM

The Miserable Science

11/19/2007 5:12:38 PM

Dismal. The Dismal Science.

11/19/2007 5:33:41 PM

indeed it is

11/19/2007 5:42:58 PM

Quote :

"So what happens if you're owed money from a person that gave it to you in the form of checkbook, debit card, and/or credit card and it turns out the money's not there?"

Then you sue them on:


If I write a check it is my promise to pay. If my bank is unable to fullfill my obligation for me then I must do it with cash or some other substitute you are willing to accept.

11/19/2007 5:48:32 PM

^ Ah yes. Lawyers - the only profession that will profit from all this.

I think if I were owed money from a person, I'd be low on the totem pole. There's actually been a couple cases where a person that declared bankruptcy and the secured creditors (banks) were the first people paid off. The unsecured creditors (which would be me and most other normal people and businesses) may get paid off, if there's any money left over after the secured creditors get all their money.

That's why I don't loan any more than $20 to a person.

[Edited on November 19, 2007 at 5:59 PM. Reason : /]

11/19/2007 5:55:49 PM

^There are no lawyers in The People's Court

11/19/2007 6:12:56 PM

^ Yeah I know. I was thinking about real courts, not turkey courts.

11/19/2007 6:14:00 PM

Quote :

"Either way, the monetary system we have in place is awesome, even if you cannot recognize it."

Gonna have to disagree with you L-Snark, my old friend. Our gov't's inflationary spending coupled with a fiat system has reduced the spending value of our Dollar by 95% since the creation of the Federal Reserve.

Fiat systems are very bad and eventually, with every inflationary dollar created, will ultimately self-destruct.

11/19/2007 10:14:25 PM

^ ugh, where to begin

11/19/2007 10:37:13 PM

haven't you heard, EDogg? According to LoneShark, the free market CAN DO NO WRONG.

11/19/2007 10:39:09 PM

^^^ If you know so much about our currency deflating why don't you bet against it?

Honestly, there is a way to hedge against fucking anything these days with minimum transaction costs. In today's modern environment the Coase theorem is practically a reality.

If shit is going to go down, sell.

If shit is going to go up, buy.

Otherwise, leave the ideological bullshit behind and step into the now, man.

11/19/2007 11:21:20 PM

EarthDogg, sure, I would peg inflation to 1% instead of 2%, but over-all the management of the U.S. currency has been remarkably good. Praise the central bankers, for they have finally solved the problem of money which had plagued mankind for five thousand years.

11/20/2007 12:00:37 AM

Check out this article in today's USA TODAY on Our Money System

http://usadaily.com/Article.cfm?articleID=168526


Would you agree, LoneSnark, that our fiat system/mixed economy will eventually lead to hyperinflation and collapse? The gov't will not curtail its spending habits, it will not raise taxes, it will keep printing fed. reserve notes. The writing is on the wall.

11/20/2007 1:12:17 AM

^ Both parties will do what they can to keep the scheme going as long as possible.

When it fails, they'll each blame the other for letting it happen. They'll both be right.

11/20/2007 8:00:30 AM

Quote :

"Would you agree, LoneSnark, that our fiat system/mixed economy will eventually lead to hyperinflation and collapse?"

Well, I cannot disprove a negative. There are a few billion years left in the future of this planet, so I would be a fool to suggest that it will never happen.

But there is nothing innate in the system that guarantees such eventualities. As long as the political arm of the country keeps appointing sound central bankers to the Federal Reserve then the system will remain sound. It is a matter of finding philosopher kings, but as long as the culture remains right it should be do-able, even for the worst of politicians.

11/20/2007 2:05:52 PM

is it really a matter of appointing "sound bankers" when it isn't the will of the "banker" to create the new money in the first place?

11/20/2007 6:00:22 PM

Don't banks want people to go into debt? I thought that was how they made their money.

11/20/2007 8:34:06 PM

sounds like i'll have to wait until next spring when the recession hits before I go out and buy a big-screen tv

probably be lots of sweet deals

11/20/2007 9:18:42 PM

Quote :

"As long as the political arm of the country keeps appointing sound central bankers to the Federal Reserve then the system will remain sound."

Quote :

"Dollar Sinks Below 108 Yen Amid Worries About U.S. Currency's Prospects SINGAPORE (AP) Friday November 23, -- The U.S. dollar fell sharply in Asia Friday, hitting record lows against the euro and a 2 1/2-year low against the yen in thin holiday trading amid a dark mood about the U.S. currency's prospects. The dollar dropped below 108.00 yen to 107.55 yen, its lowest since June 2005, before regaining some ground to 107.82 yen. The 13-nation euro capped a string of recent records to climb to a high of $1.4968 before slipping back to $1.4918. Market participants say the U.S. currency will remain vulnerable to selloffs given concerns about the deepening U.S. subprime-mortgage crisis and growing expectations that the Federal Reserve will have to cut interest rates further to shore up the U.S. economy. The dollar's break below psychological support against the Swiss franc, at 1.1000 Swiss francs, was the main trigger for the heavy dollar selling against a range of currencies, traders said. "Our view for the (euro/dollar) pair remains unchanged and a stab at 1.5080," said Emmanuel Ng, an analyst at OCBC Bank in Singapore. Trading was thin due to a holiday in Japan Friday as well as the U.S. Thanksgiving Day holiday Thursday. Meanwhile, the People's Bank of China set the dollar/yuan central parity, the rate around which it lets the tightly controlled pair move, below 7.4 for the first time, at 7.3992 yuan to the dollar. Beijing has been letting the yuan rise steadily against the dollar since it abandoned its dollar peg and revalued the yuan in 2005. The Chinese currency's appreciation has accelerated over the past six weeks. The Singapore dollar, meanwhile, rose to a 10-year high against the dollar and in mid-afternoon trading in Asia was at 1.4420 to the dollar. "

[Edited on November 23, 2007 at 10:07 AM. Reason : .]

11/23/2007 10:06:50 AM

Quote :

"Either way, the monetary system we have in place is awesome, even if you cannot recognize it."

Well, I can't see how anyone could argue with that!

Quote :

"Praise the central bankers, for they have finally solved the problem of money which had plagued mankind for five thousand years."

Quote :

"It is a matter of finding philosopher kings, but as long as the culture remains right it should be do-able, even for the worst of politicians."

You're starting to worry me, Snarkie. Sometimes you sound like an anarchist. Now you're lauding the Illuminati. I'm not sure what to make of it.

11/23/2007 12:52:48 PM

Its all a conspiracy.
The fed pursuded congress to pass a bill that backed bank loans to subprime markets, knowing that it will be a big bust when the bubble burst and the economy slowed down.
They did this because the economy was already busting but they want to reorganise it so they will pull cash out of the system by denying loadns and taking back the cash.
this will have catastrophic consequences on our economy, but dont be fooled, its all a well oiled plan to change the structure of our economy.
im not sure to exactly what though.
maybe they are comming to a big realization that we cannot compete with china, and the north american alliance is not gonna happen any time soon so we have to do something drastic.

anyways if 30% of what i just wrote is right i'll be happy.

11/23/2007 8:23:56 PM

you forgot the alex jones links.

11/23/2007 10:00:45 PM

so, still, what good does a good central banker do if the inflation is caused at the order of the gov't anyway?

11/23/2007 11:30:20 PM

^
excellent point.

11/24/2007 12:12:04 AM

I was praising the system we have, not the central bankers themselves. Our current monetary system is regulated by an independent Central Bank, beyond the direct influence of politicians. As such, the government as it is currently structured is incapable of issuing such an order (they can ask, as Bush Sr did in 1991, but Greenspan chose to ignore him and raised interest rates anyway; some say, losing Bush Sr the election).

Now, congress can change this with 51% of the vote, but so far they have not. And until they do all we need are wise central bankers and wild swings in monetary supply will be avoided (but growth and shrinkage).

Oh, and EarthDogg, contrary to what they teach in class, exchange rates are a poor measure of inflation. The dollar has been lower against the pound many times throughout the 20th century, it will be even lower eventually. But it will also someday set new highs. No one can tell you when, how, or why.

11/24/2007 1:15:49 AM

why put all that power in an independent private bank motivated by their own profits

11/24/2007 2:10:23 AM

It was created by an act of Congress, it is not a private anything.

11/24/2007 10:32:53 AM

Quote :

"exchange rates are a poor measure of inflation."

I don't believe I made that particular claim. The interesting point is that there is a "dark mood about the U.S. currency's prospects."

Do Fed Reserve policies have any responsibility for this dark mood?

Quote :

"Our current monetary system is regulated by an independent Central Bank, beyond the direct influence of politicians."

They are nominated by the president ( a politician) and confirmed by the senate (a whole bunch of politicians). Their salaries are set by the Congress (even more politicians).

Before his appointment as Chairman, Bernanke was Chairman of the President's Council of Economic Advisers (a political appointee).

Prior to his appointment to the Board, Mr. Warsh served as Special Assistant to the President for Economic Policy and as Executive Secretary of the National Economic Council from 2002 until February 2006. (another political appointee)

Other than that, I guess the Fed is completely free of political pressure.

11/24/2007 10:49:14 AM

Quote :

"It was created by an act of Congress,"

you need to just stop posting with all your ignorance.

first off all it was created by an act of bribery and deceit. even Woodrow Wilson the sitting president acknowledged that it was a big scam but it was too late.

Quote :

" it is not a private anything."

the bank is privately owned, makes decisions behind closed doors with no oversight. yeah that sounds like a great idea.

11/24/2007 11:14:22 AM

Quote :

"first off all it was created by an act of bribery and deceit. even Woodrow Wilson the sitting president acknowledged that it was a big scam but it was too late."

And that would make it unusual among acts of Congress how?

Quote :

"the bank is privately owned, makes decisions behind closed doors with no oversight. yeah that sounds like a great idea."

Repeat yourself as much as you want, will not make it true. The Federal Reserve answers to a group of men all appointed by your dully elected politicians.

Are you really upset that the board does not face direct oversight from politicians? Should politicians also have oversight of the Supreme Court? How many laws do you think would ever be found unconstitutional?

Similarly, when if ever would the bank vote to raise interest rates to halt inflation if every decision had to be over-seen by congressmen up for election?

Quote :

"Do Fed Reserve policies have any responsibility for this dark mood?"

Of course they do; the Fed has cut interest rates recently to prevent the onset of deflation. But, as always happens when you cut interest rates, your currency devalues. But the dollar had already fallen quite far before that, so very little of the dollars total fall can be blamed on the Federal Reserve.

11/24/2007 4:44:50 PM

Quote :

"Are you really upset that the board does not face direct oversight from politicians? Should politicians also have oversight of the Supreme Court? How many laws do you think would ever be found unconstitutional? "

yes.
no, its a different branch of the goverment, but there are checks and balances.
^

the power to print and regulate money was given to congress by the constitution, when it was held by congress the dollar was strong and our economy was stable although there were periods of inflation.
now our dollar is weak & our economy depends on many volitile factors which didnt have to be.

yes congress, like the fed, has the potential to make bad decisions. but i think the real problem is not seen when things are going well, its when things go wrong that we will see the error.

11/24/2007 7:20:47 PM

Taking away the Federal Reserve's power worked for JFK until they shot him for it. Why on earth would our government want to borrow money from the federal reserve at interest when they can just create it themselves?

[Edited on November 24, 2007 at 7:55 PM. Reason : .]

11/24/2007 7:54:24 PM

People in this country dug themselves into this mess with their "I want to own [insert whatever] now without having to pay for it now", "I have to keep up with the Joneses even though it means living well beyond my means" attitude, let them dig themselves out. Our economy's only going to get worse before it gets better anyway, maybe this will be a sobering wake-up call to our population's run-away consumerism. It's one thing to splurge with your hard-earned income a little bit here and there to boost your morale and give yourself the odd treat, but it's high time Americans learned some fiscal responsibility. Except for the money I've promised to pay back to my parents, I'm not in deep financial debt to anybody. I only purchase stuff with my credit card when I know I've got the cash to back up the purchase. I rarely make outstanding purchases, and typically I don't feel the need to own a lot of stuff. Granted I'm lucky in that I don't have school loans to pay off or anything like that, but it's not that hard to stay out of debt. I have no sympathy for people who can't control themselves. I don't blame people for their mistakes, but I expect that they pay for them.

11/24/2007 8:43:31 PM

Well, as it is set up, the board of governors operates as a separate branch of government. With the obvious exception that Congress can do whatever it wants with it, requiring only a 51% majority.

Quote :

"the power to print and regulate money was given to congress by the constitution, when it was held by congress the dollar was strong and our economy was stable although there were periods of inflation. now our dollar is weak & our economy depends on many volitile factors which didnt have to be."

Congress never used that power, it was always divested into a separate institution, such as the Treasury Department. But you are completely wrong about it being stable:
"A measure of short-term price instability is the coefficient of variation, which is the ratio of the standard deviation of annual percentage changes in the price level to the average annual percentage change. The higher the coefficient of variation, the greater the short-term instability. For the United States between 1879 and 1913, the coefficient was 17.0, which is quite high. Between 1946 and 1990 it was only 0.8."
http://www.econlib.org/library/Enc/GoldStandard.html

There is no comparison: by any measure our current monetary system is producing far better results than any other tried in history. But you are right about the weak dollar being the fault of our monetary system: if we were on the gold standard, our current balance of payments issue would have caused a severe economic depression by now. But, thanks to floating exchange rates, the dollar just falls against other currencies unwinding the imbalance slowly, instead of all at once by making Americans poor.

11/25/2007 9:02:34 AM

^
But wouldn't you agree that the Gold standard kept runaway gov't spending somewhat in check?

Would 20th century gov'ts been as war-crazy without the fiat money to pay for it?

11/25/2007 10:37:29 AM

Quote :

"For the United States between 1879 and 1913, the coefficient was 17.0, which is quite high. Between 1946 and 1990 it was only 0.8."

It's interesting that they decided to leave out 33 years. I wonder why?

11/25/2007 11:06:52 AM

^ If you read the page you would see they left them out because they were attempting to compare the gold standard to the fiat standard, and during that 33 years the dominant monetary system was neither, some cross between that worked far worse than either.

^^ Not at all. I don't know why you think it would. The only thing limiting government spending is the will not to spend money they did not collect through taxes. The only monetary system that would prevent such behavior would be the absense of paper money. IE, civilians refusing to accept anything but gold coin. But even then, Government could easily bypass the system by debasing the currency.

So, no, to the best of my knowledge there is no monetary system ever invented that curtails government spending beyond the will of the politicians to contain themselves, either out of moral grit or from fear of reprisals from the citizenry.

As such, all we are left with is the question of which system is more stable regardless of government behavior, and that is a fiat monetary base combined with wise regulation.

11/25/2007 3:51:26 PM