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The great 'living within our means' con
Topic Started: 8 Dec 2016, 11:05 AM (4,574 Views)
Rufus
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Simon_S
9 Dec 2016, 09:57 AM


Not at all.

What you forget is the Asset value falls but the Debt still remains. Or are you saying that their value always corresponds?

So when the Asset value falls so does the Debt?
Assets may have value, but they are NOT money.

Money is created in the double entry booking systems of banks, but they don't create assets. People buy assets with money.

You might exchange $100,000 for shares valued at $100,000 in the instant of purchase, but thereafter the asset value will change.

What doesn't change is the $100,000 you originally used to buy that asset. It has remained the same, but it now belongs to the seller. If you borrowed that $100,000 then you still have the debt, and the seller has the money, and it balances exactly.
Take risks - if you win you will become wealthy, if you lose you will become wise
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stinkbug
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Ex BP Golly
9 Dec 2016, 10:02 AM

Alternatively, non prime loans aren't valuable performing assets.

I thank you for your remarkable insights.

Non-prime loans are still assets, but they tend to be riskier, which is reflected in their pricing.

I thank you in return for your remarkable insights.
Simon_S
9 Dec 2016, 09:57 AM


Not at all.

What you forget is the Asset value falls but the Debt still remains. Or are you saying that their value always corresponds?

So when the Asset value falls so does the Debt?
How on earth do you draw a conclusion like this from what I wrote? This makes no sense at all.

The value of the asset and debt, and their relationship, changes from the moment the transaction has completed. That's the whole point of leveraged investing.
Edited by stinkbug, 9 Dec 2016, 10:28 AM.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Sydneyite
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Rufus
9 Dec 2016, 10:23 AM
Assets may have value, but they are NOT money.

Money is created in the double entry booking systems of banks, but they don't create assets. People buy assets with money.

You might exchange $100,000 for shares valued at $100,000 in the instant of purchase, but thereafter the asset value will change.

What doesn't change is the $100,000 you originally used to buy that asset. It has remained the same, but it now belongs to the seller. If you borrowed that $100,000 then you still have the debt, and the seller has the money, and it balances exactly.
^^^^ this. Do you get it yet Simon?
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Simon_S
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Ex BP Golly
9 Dec 2016, 10:02 AM

You obviously haven't been to enough property seminars if you can't understand this stuff :wink
Unfortunately I haven't.

But you have to hand it to them continually having to come with theories about how Asset values will continue to rise when history is littered with so many examples of the Exact opposite happening.


Sydneyite
9 Dec 2016, 10:37 AM
^^^^ this. Do you get it yet Simon?
Do you understand that you can create all the money in the world but you cannot create the demand for it.

Edited by Simon_S, 9 Dec 2016, 10:49 AM.
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Sydneyite
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Simon_S
9 Dec 2016, 10:45 AM
Do you understand that you can create all the money in the world but you cannot create the demand for it.
Changing the topic now? Plus that statement is wrong anyway - demand for money is unlimited - the problem with unfettered money creation is that it created inflation if the result in more money chasing the same finite resources in an economy.

But again, that has nothing to do with what we are talking about here, which is that in aggregate double entry book-keeping results in the situation where total debts always equals total credits within a monetary system.
Edited by Sydneyite, 9 Dec 2016, 11:17 AM.
For Aussie property bears, "denial", is not just a long river in North Africa.....
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Simon_S
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stinkbug
9 Dec 2016, 10:27 AM

The value of the asset and debt, and their relationship, changes from the moment the transaction has completed. That's the whole point of leveraged investing.
Does it makes sense to leverage in a falling market..........
Sydneyite
9 Dec 2016, 10:53 AM
Changing the topic now? Plus that statement is wrong anyway - demand for money is unlimited - the problem with unfettered money creation is that it becomes inflationary if it results in more money chasing the same finite resources in an economy.

But again, that has nothing to do with what we are talking about here, which that in aggregate double entry book-keeping results in the situation where total debts always equals total credits within a monetary system.
So in a Deflationary Environment demand is unlimited.......

But again Double entry Book Keeping does not control nor prevent Crises from happening......You know where asset values fall.......the real world where Banks and People go broke and Govts default.....

What world do you live in?



Edited by Simon_S, 9 Dec 2016, 11:01 AM.
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Rufus
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Simon_S
9 Dec 2016, 10:54 AM
Does it makes sense to leverage in a falling market..........

So in a Deflationary Environment demand is unlimited.......

But again Double entry Book Keeping does not control nor prevent Crises from happening......You know where asset values fall.......the real world where Banks and People go broke and Govts default.....

What world do you live in?


You do find the truth to be ever so inconvenient don't you Simon.

You boast about the high risk trades that you pretend to profit from, but you can't understand the basics.
The market is going to screw you to the wall if you don't wise up.
Edited by Rufus, 9 Dec 2016, 11:05 AM.
Take risks - if you win you will become wealthy, if you lose you will become wise
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Simon_S
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Rufus
9 Dec 2016, 11:05 AM
You do find the truth to be ever so inconvenient don't you Simon.

You boast about the high risk trades that you pretend to profit from, but you can't understand the basics.
The market is going to screw you to the wall if you don't wise up.
You clowns must all be Accountants.....

In the Real world there are Markets.....

Must be why I trade and You invest.....
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Rufus
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Simon_S
9 Dec 2016, 11:13 AM
You clowns must all be Accountants.....

In the Real world there are Markets.....

Must be why I trade and You invest.....
Best of luck with those trades.....
Take risks - if you win you will become wealthy, if you lose you will become wise
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stinkbug
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Simon_S
9 Dec 2016, 10:54 AM
Does it makes sense to leverage in a falling market..........

That's a completely different issue to the discussion at hand.

Obviously leveraging into a falling market doesn't bring good short term results.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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