Obama on Fiscal Responsibility

[bjorn_skurj]

I agree. And America is in the worst position because we are the biggest consumer and debtor. We dont have any plans of paying back our money, sooner or later we will get screwed for it.

Sure we have plans. It is called "taxes" and our children's children's children's cloned robot babies are going to be paying them.

[Guest Jules]

That appreciation is not real. It is based unsubstainable low interest rates in an inflationatory economy that keeps alive by borrowing and not actually making money. Thats what you dont get. The overblown equity value you state is based on borrowed money which isnt real. The bubbles are not real money making.

Do you agree that it is possible to borrow money (mortgage) to buy a house, consequently sell that house and make money on it?

[MattZ]

That appreciation is not real. It is based unsubstainable low interest rates in an inflationatory economy that keeps alive by borrowing and not actually making money. Thats what you dont get. The overblown equity value you state is based on borrowed money which isnt real. The bubbles are not real money making.

 

What are you talking about? I have $150 in my pocket. How is that not real?

 

Do you agree that it is possible to borrow money (mortgage) to buy a house, consequently sell that house and make money on it?

 

Apparently not.

[ZenLunatic]

Do you agree that it is possible to borrow money (mortgage) to buy a house, consequently sell that house and make money on it?

 

You can always make money by buying low and selling high. Ive done it many times. You are missing the point I am trying to make. You need to produce value goods and services to make money. You cant inflate value of things from borrowing lots of money and say we are making money.

[ZenLunatic]

What are you talking about? I have $150 in my pocket. How is that not real?

 

So from there you had to buy a new home at 170 but its now worth 100. You lose.

[MattZ]

You can always make money by buying low and selling high. Ive done it many times. You are missing the point I am trying to make. You need to produce value goods and services to make money. You cant inflate value of things from borrowing lots of money and say we are making money.

 

No one's missing your point. Your point is wrong. You dont need to produce goods and services to make money. You can also make money by buying low and selling high. Or if you are a government, by borrowing money to create jobs, thereby creating wealth, and then taxing the wealth to pay off your debt. This has nothing to do with bubbles.

 

 

So from there you had to buy a new home at 170 but its now worth 100. You lose.

 

Why do I have to do that?

[mfwahl]

So from there you had to buy a new home at 170 but its now worth 100. You lose.

I think this a direct quote from my 4 year old nephew during a game of Monopoly.

[Guest Jules]

You can always make money by buying low and selling high. Ive done it many times. You are missing the point I am trying to make. You need to produce value goods and services to make money. You cant inflate value of things from borrowing lots of money and say we are making money.

I am not missing your point. I do agree 100% with your bolded statement above, but this isn't the only way.

 

No one's missing your point. Your point is wrong.

[ZenLunatic]

No one's missing your point. Your point is wrong. You dont need to produce goods and services to make money. You can also make money by buying low and selling high. Or if you are a government, by borrowing money to create jobs, thereby creating wealth, and then taxing the wealth to pay off your debt. This has nothing to do with bubbles.

 

Just saying create jobs and create wealth is too generic. All depends on what jobs they are and what industry. If you borrow billions to create jobs that lead to nothing, you substain a way of life till the borrowed money runs out. This the trend our country has been on for a long time and still on. You have to create an indusrty and jobs that will actually make money for the country. You are missing my point.

 

Why do I have to do that?

 

In any way, you need a place to stay and you will have to buy in an inflated market, then watch it deflate.

[Moe_Syzlak]

What if I buy an apartment building as a secondary investment (i.e. not my residence), have a mortgage that is $2K/month and rent the four units for $1K each? How is that $2K profit not real?

[ZenLunatic]

I am not missing your point. I do agree 100% with your bolded statement above, but this isn't the only way.

 

It really is the only way to make real money. Of course you can invest in things, but the investments are of companies making products and services.

[MattZ]

Just saying create jobs and create wealth is too generic. All depends on what jobs they are and what industry. If you borrow billions to create jobs that lead to nothing, you substain a way of life till the borrowed money runs out. This the trend our country has been on for a long time and still on. You have to create an indusrty and jobs that will actually make money for the country. You are missing my point.

 

I am not missing your point. I promise. I was using broad brush strokes to illustrate how govts can borrow money in an effort to create wealth that can be taxed. Since you said it couldn't be done. Of course all this depends on what jobs are created and what industries. We want to create something sustainable. I never suggested otherwise.

 

In any way, you need a place to stay and you will have to buy in an inflated market, then watch it deflate.

 

Maybe my money is in the bank now and I am renting? Why are you making these assumptions? Not to mention, if the money borrowed and spent to create jobs ends up creating wealth, what's to say that the "inflated market" isn't a true indication of what people are willing to spend to live in houses? Are you telling me that you don't believe that assets can appreciate in value because they aren't goods and services? By definition they are inflated?

[Artifice]

You can always make money by buying low and selling high. Ive done it many times. You are missing the point I am trying to make. You need to produce value goods and services to make money. You cant inflate value of things from borrowing lots of money and say we are making money.

 

You are trying to argue for a commodity based currency, whether you realize it or not. Ours is a fiat currency. Debt = money.

[MattZ]

It really is the only way to make real money. Of course you can invest in things, but the investments are of companies making products and services.

 

Are you taking Econ 101 right now?

[ZenLunatic]

What if I buy an apartment building as a secondary investment (i.e. not my residence), have a mortgage that is $2K/month and rent the four units for $1K each? How is that $2K profit not real?

 

You are providing a service. You are a landlord.

[Guest Jules]

You are providing a service. You are a landlord.

and making money with borrowed money.

[JUDE]

If anyone has some of those 4-plex apartments that net $2K positive cash flow a month available, I'll buy a few.

[Moe_Syzlak]

You are providing a service. You are a landlord.

Look I actually agree with you that we are too dependent on credit (both individually and as a country), but to dismiss borrowing money as a form of wealth generation out of hand is ridiculous. Of course you can create wealth with borrowed money. What is your distinction about services (such as the landlord example)? You seem to be saying that you can't borrow money and then piss it away. If that's the case, that gets a big ole "well duh!" from me.

[ZenLunatic]

I am not missing your point. I promise. I was using broad brush strokes to illustrate how govts can borrow money in an effort to create wealth that can be taxed. Since you said it couldn't be done. Of course all this depends on what jobs are created and what industries. We want to create something sustainable. I never suggested otherwise.

 

Maybe my money is in the bank now and I am renting? Why are you making these assumptions? Not to mention, if the money borrowed and spent to create jobs ends up creating wealth, what's to say that the "inflated market" isn't a true indication of what people are willing to spend to live in houses? Are you telling me that you don't believe that assets can appreciate in value because they aren't goods and services? By definition they are inflated?

 

Well what plan is there to create something sustainable? Just more talk about creating jobs right now.

 

I make assumptions cause you made alot of them too. Assets can appreciate or depreciate according to the value it provides. When it comes to real estate and stocks in companies, housing has been totally way overflated and there are alot of bad businesses that need to go under. Alot of what we have in America has been totally inflated. We need to deflate.

[ZenLunatic]

Look I actually agree with you that we are too dependent on credit (both individually and as a country), but to dismiss borrowing money as a form of wealth generation out of hand is ridiculous. Of course you can create wealth with borrowed money. What is your distinction about services (such as the landlord example)? You seem to be saying that you can't borrow money and then piss it away. If that's the case, that gets a big ole "well duh!" from me.

 

 

Just saying now, we dont need to be borrowing billions to fund all these bailouts and propping of failed industries and even build roads and bridges just to create jobs. How could we be doing all that and say lets spend responsibly. Feels contradictory.

[Guest Jules]

Just saying now, we dont need to be borrowing billions to fund all these bailouts and propping of failed industries and even build roads and bridges just to create jobs. How could we be doing all that and say lets spend responsibly. Feels contradictory.

what's your solution?

[MattZ]

Well what plan is there to create something sustainable? Just more talk about creating jobs right now.

 

I make assumptions cause you made alot of them too. Assets can appreciate or depreciate according to the value it provides. When it comes to real estate and stocks in companies, housing has been totally way overflated and there are alot of bad businesses that need to go under. Alot of what we have in America has been totally inflated. We need to deflate.

 

Come on, man. Now you are changing your argument. I never would (or could) argue with anything you said that I quoted above. My argument was with your dismissal of using borrowed money to create wealth.

[ZenLunatic]

Come on, man. Now you are changing your argument. I never would (or could) argue with anything you said that I quoted above. My argument was with your dismissal of using borrowed money to create wealth.

 

I understand there needs to be a level or credit for business and governments to run. I just think our government has taken our credit to its limit and soon will be out high and dry from our creditors. We lived a more than comfortable life because we borrowed the money instead of making it. Now its time to face reality and we are not doing it. We keep trying to reinflate the bubble when we need to deflate.

[John Smith]

Let's say you buy a house for $100 by putting $10 down, and borrowing $90.

Let's say that five years later you sell the house for $150, and pay the bank back their $90.

Did you not just increase your own wealth on borrowed money?

Of course you can grow wealth (and an economy) on borrowed money. I dont even understand what you are arguing half the time.

 

The problem was that the banks, with pressure from the governnment (The former president talked many times about "encouraging" the banks to make the loans) pushed alot of money out into the marketplace allowing people who previously could not afford a home to now purchase one. These people were targeted and they bit. With all these new home buyers out there bidding for homes the prices were inflated dramatically creating "the Bubble" (assets selling for more than their true value) The buble burst when the baloon payments started coming due or when interests rates shifted a little too far. One forclosure followed the next, homes were unsalable as prices rapidly dropped so the homes were worth more than their mortgages. So these people did increase their wealth on borrowed money, but the terms of borrowing also sealed their doom. Toss on top of that all the derivatives and financial products sold associated with the mortgage industry, a lot of it paid for on margin, not all but enough. and the easy credit killed the economy. So the borrowed funds also wiped out a heck of a lot of wealth.

 

 

what's your solution?

 

Fuck'em all, build debtors prisons. Fully enforce the laws of the jungle and make social darwinism the defacto law of the land. Or maybe fix the system. Tighten up lending a little for home buyers. Seriously tighten up the rules on financial products. rebuild the walls between banks and brokerage houses. Rebuild the walls between S&L's & Banks & Credit unions etc... Regulate the markets properly because they can not be trusted to regulate themselves they prove that time and time again.

[ZenLunatic]

what's your solution?

 

Just to start. Let the companies go through normal process of the market. No more bailouts, no mortgage plan. Cut government spending, lets start by reducing our military force. I do think Obama is doing good with some of his plans and ideas just not all.