As we become more efficient at creating things and extracting resources, as we become more integrated into a global market place, there is only one direction for prices.
If you can't afford to compete on price, just shift your manufacturing base somewhere else.
The workers you fire can get jobs flipping burgers or cleaning hotel bedrooms. They can still afford to buy your goods, because they will be cheaper. If not, they can always borrow.
But what happens if your business model is simply to borrow to buy today in the hope of selling for more later? If you leveraged $100k at 10/1 into an asset that doubled in seven years, you would have done very well.
But what if you leveraged into a share or asset that went down? What if millions of others had done the same?
They would spend the next twenty years trying to pay down their loss, not spending in the economy.
So how do you stop this from happening?
One approach, is to make money cheaper to borrow. Encourage more people to leverage in and keep prices rising.
The problem with this approach, is that it only works until all the buyers who can now afford to buy, have bought.
Then you are back to square one. So you make money even cheaper, drag in some new buyers.
You could cheapen your currency as well. Make your assets more attractive to foreign buyers.
But again, there is a limit to how long this can work.
And when it stops working?
Maybe a helicopter drop?
And when that stops working?
Raise rates?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
As we become more efficient at creating things and extracting resources, as we become more integrated into a global market place, there is only one direction for prices.
If you can't afford to compete on price, just shift your manufacturing base somewhere else.
The workers you fire can get jobs flipping burgers or cleaning hotel bedrooms. They can still afford to buy your goods, because they will be cheaper. If not, they can always borrow.
But what happens if your business model is simply to borrow to buy today in the hope of selling for more later? If you leveraged $100k at 10/1 into an asset that doubled in seven years, you would have done very well.
But what if you leveraged into a share or asset that went down? What if millions of others had done the same?
They would spend the next twenty years trying to pay down their loss, not spending in the economy.
So how do you stop this from happening?
One approach, is to make money cheaper to borrow. Encourage more people to leverage in and keep prices rising.
The problem with this approach, is that it only works until all the buyers who can now afford to buy, have bought.
Then you are back to square one. So you make money even cheaper, drag in some new buyers.
You could cheapen your currency as well. Make your assets more attractive to foreign buyers.
But again, there is a limit to how long this can work.
And when it stops working?
Maybe a helicopter drop?
And when that stops working?
Raise rates?
The problem is, there is no Plan B.
It is just assumed that money can be made cheaper forever and consumption will increase.
That's a really bad assumption, because manufacturing can become more efficient and less labour intensive faster than interest rates can decrease.
One option is negative interest rates, which will cause capital flight and hot money flows to anywhere that has positive interest rates. Until there are negative rates of interest everywhere.
I see a bright future in four key industries: Media delivery (TV, internet), sports, drugs and alcohol, and prostitution. Colorado might be a test bed for this new societal organisation.
“Talk sense to a fool and he calls you foolish.” - Euripides
You are deciding that government cash and government ultra liquid bonds are totally different forms of money.
Yes they are. Notes of credit are sold at a discount to cash and have a maturity date. Next you'll be saying interest rates are meaningless. If interest rates were to suddenly rise the bond market would go into meltdown. There is no bond market in history yielding the megatons of the present one.
As we become more efficient at creating things and extracting resources, as we become more integrated into a global market place, there is only one direction for prices.
If you can't afford to compete on price, just shift your manufacturing base somewhere else.
The workers you fire can get jobs flipping burgers or cleaning hotel bedrooms. They can still afford to buy your goods, because they will be cheaper. If not, they can always borrow.
But what happens if your business model is simply to borrow to buy today in the hope of selling for more later? If you leveraged $100k at 10/1 into an asset that doubled in seven years, you would have done very well.
But what if you leveraged into a share or asset that went down? What if millions of others had done the same?
They would spend the next twenty years trying to pay down their loss, not spending in the economy.
So how do you stop this from happening?
One approach, is to make money cheaper to borrow. Encourage more people to leverage in and keep prices rising.
The problem with this approach, is that it only works until all the buyers who can now afford to buy, have bought.
Then you are back to square one. So you make money even cheaper, drag in some new buyers.
You could cheapen your currency as well. Make your assets more attractive to foreign buyers.
But again, there is a limit to how long this can work.
And when it stops working?
Maybe a helicopter drop?
And when that stops working?
Raise rates?
Hi Jimbo,
If you interested please google Mr. Marc Faber.
Then Google Austrian Economics.
Then as a base think of Albert Einstein "everything is relative"
So the things you are saying are perfectly correct in my opinion.
But you have to run it through filters.
Also Google "Neo Tech"
Neo Tech states that as the cost of manufacturing drops to zero all things will basically be free.
So as Dire Straits said very prophetically "your money for nothing and your chicks for free.
When my Granddaddy was a boy he would get a whole big bag of lollies for half a penny.
Now you need 5,000 pennies.
But i would argue that it is easier for me to get that 5,000 pennies than Granddad to get the halfpenny.
Also with health and nutrition improvements i am less likely to ever buy a bag of lollies.
I bought a farm about 10 years ago for $1.1m.
I gave the seller $1.1m he gave me the keys.
Deal done.
100 years ago my grandaddy bought a farm, it was a lot "cheaper"
But,
No electricity no fencing not cleared not shearing shed no sheep yards no house no water the list goes on but you get the picture
The farm i bought was actually cheaper than the farm my granddaddy bought 100 years earlier.
Plus i could run sheep on the one i bought the first day.
Jimmbo, imagine the human experience as an electrical system, one that you can plug in an appliance where ever the electrical system exists.
That is how i see the human economic system.
So as long as the generator spins and the cables are intact you can do whatever you want almost instantly.
This is what humanity is creating.
There are bumps along the way.
But i think that is where we are heading.
So in a nut shell.
Everything will become free.
If you think it you will be able to create it. (Kickstarter is a crude form of this)
Money is like electricity.
And it is an external approximation of the electrical system inside a human body.
So we are creating our environment in our own image.
If we think about going to Mars we will go.
Not bad for a hairy monkey.
And Jimbo as for the jobs flipping hamburgers, there will be no hamburger flipping jobs.
And Jimbo as for the jobs flipping hamburgers, there will be no hamburger flipping jobs.
Actually, was discussing with colleagues about the award rate for casual labor in Australia being close to the equivalent for a 40-49 year old salaried worker in Korea or Japan.
It is just assumed that money can be made cheaper forever and consumption will increase.
Plan A is simply to make sure that it keeps going today and worry about tomorrow when it comes.
Like the finance manager who rushes around departments on the last day of the quarter trying to see if works can be invoiced today rather than in the morning.
It gets the numbers up for this quarter though. But three months later, he will be rushing around trying to bring forward invoicing from the next quarter? I have seen this absurd, pointless, zero sum game everywhere I have worked.
So we take from tomorrow to make today look good and hope that tomorrow we will be able to do the same thing again and more so. And we think we can keep doing this forever?
Lend me $10 and I'll pay you back the $5 you lent me last week.
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
No financers will consolidate all money. Nothing will be free. You will need money. If you're a brute you're a slave. Can't steal digital money. So wimp hackers will thrive in cashless society. If you're female and good looking, offer the financers your pussy. That's the NWO.
And Jimbo as for the jobs flipping hamburgers, there will be no hamburger flipping jobs.
There will come a time when there will be no jobs at all. Anything a human can do, a humanoid robot can do better.
Only a 100 or so years ago, it took an army of human workers to support the wealthy lifestyle of a single rich person. Now, not so many are required.
So what happens next? Do we all stop working and live equal lives of luxury and leisure? If nobody is working, who decides who gets what? Will we need 6 billion people?
Matthew, 30 Jan 2016, 09:21 AM Your simplistic view is so flawed it is not worth debating. The current oversupply will be swallowed in 12 months. By the time dumb shits like you realise this prices will already be rising.
Yes they are. Notes of credit are sold at a discount to cash and have a maturity date. Next you'll be saying interest rates are meaningless. If interest rates were to suddenly rise the bond market would go into meltdown. There is no bond market in history yielding the megatons of the present one.
Yes. government cash and government ultra liquid bonds are totally different forms of money.
The interest difference is the main difference. Otherwise their ability to be spent if you have millions in cash or millions in bonds is similar. Both are very highly liquid.
Yes. government cash and government ultra liquid bonds are totally different forms of money.
The interest difference is the main difference. Otherwise their ability to be spent if you have millions in cash or millions in bonds is similar. Both are very highly liquid.
Fair enough. Bonds are certainly used in exchange. But they are ultimately deferred payment and are highly vulnerable to interest rates. Typically in the olden days to borrow cash, or make a deferred payment a man would write a note at a value greater than the cash payment. At one stage the main character in the Poldark series in financial difficulties writes a 12 month note for 1400 pounds, but only gets 1000 pounds for it. Effectively paying 40% annual interest.
The next trick of our glorious banks will be to charge us a fee for using net bank!!! You are no longer customer, you are property!!!
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