Moody's Assessment of Overvalued Australian Housing: Local analysts don't know how serious it is; Stark warning bells sound: Australians blind to impending financial Armageddon
Tweet Topic Started: 16 Jul 2013, 09:36 AM (10,589 Views)
If someone doesn't trust the Bitcoin then they won't accept it as payment, so for them it isn't money although it may be for you.
Cash is only an accounting system, it has no intrinsic value. If I did a job for you for $100 then you owe me $100. If you were able to supply me with goods valued at $100 that I wanted then no cash need change hands. But if that wasn't the case then you give me $100 in cash or digits in my bank account to spend elsewhere - it's only an accounting system that is very helpful for tax collection as it allows record keeping.
Catweasel say mouse can pay for its mouse house base on how many revolutions it run on wheel.
In a past, maybe it have to turn a mouse wheel 20,000,000,000 the revolution.
But now, it might need 31,894,173,981 revolution.
Even if Mrs Mouse run on wheel with it.
So cash the be a irrelevant.
Mouse energy and time the important.
Wheel can only turn so many the revolution without a maintenance.
I presume you mean barring a significant rise in unemployment.
Point being, you dont need subprime lending to fuck your mortgage book.
All you need is for the dude paying the mortgage to lose his job on a house worth less than he paid for it.
There was virtually no sub prime in Ireland and the UK.
In years gone by the SVR was the rate that banks charged. Note that the so called Zirp rates of today were actually the norm back in the fifties and the sixties when we had zero unemployment. that's a far cry from the seventies and eighties and even later decades. I have a list on interest rates but it must be on my work desktop.
People don't sell because they go underwater, they only sell if they are forced to because they can't meet repayments.
It's up to the RBA to keep rates low and the government to create employment. If they stuff up you might get your wish, but if they do their job well then there will not be much price stress.
Catweasel
17 Jul 2013, 12:28 AM
Catweasel say mouse can pay for its mouse house base on how many revolutions it run on wheel.
In a past, maybe it have to turn a mouse wheel 20,000,000,000 the revolution.
But now, it might need 31,894,173,981 revolution.
Even if Mrs Mouse run on wheel with it.
So cash the be a irrelevant.
Mouse energy and time the important.
Wheel can only turn so many the revolution without a maintenance.
yes it's your time and energy that has the value not the cash. Money only represents that value like a number on a slate at the pub might represent what you owe them at the end of the week.
In years gone by the SVR was the rate that banks charged. Note that the so called Zirp rates of today were actually the norm back in the fifties and the sixties when we had zero unemployment. that's a far cry from the seventies and eighties and even later decades. I have a list on interest rates but it must be on my work desktop.
People don't sell because they go underwater, they only sell if they are forced to because they can't meet repayments.
It's up to the RBA to keep rates low and the government to create employment. If they stuff up you might get your wish, but if they do their job well then there will not be much price stress. yes it's your time and energy that has the value not the cash. Money only represents that value like a number on a slate at the pub might represent what you owe them at the end of the week.
Its not my wish.
As ive said before, I believe a genie has been let loose.
I hope getting him back in the bottle will be as painless and equitable as possible.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
As ive said before, I believe a genie has been let loose.
I hope getting him back in the bottle will be as painless and equitable as possible.
It's irrelevant whether it's your wish or not. If you see an opportunity to buy below the market then any sensible person would take that opportunity. It gives the vendor an option that they wouldn't otherwise have and they can refuse if they prefer.
I don't think a genie is out of the bottle, in fact I believe that the USA is the outlier and after they get over their subprime crisis and our dollar falls back to historical values, our house prices will be about the same as USA prices. The prices in the USA are rising strongly.
Other nations like Ireland and Spain have different issues which include an inability to control the currency they use.
Any expressed market opinion is my own and is not to be taken as financial advice
Its a mass infusion of credit (demand) in the face of rigid inadequate supply.
I agree with you that, really, a recession is required to cause a major correction.
Or something that would cause investors to run for the door.
Or like i said a bolt from the blue that causes a credit contraction.
Wow - this is good. After 10 pages on the thread we have actually got somewhere! Veritas you seem to agree now with many of us "bulls" that:
* A major correction would require a major trigger.
* Credit availability does not automatically increase house prices - you need to also have supply contraints and/or demand that outstrips supply. I would add that these effects tend to be localised as well (suburb, city region, city etc). Hence the reason why houses are much cheaper in Hobart compared to Sydney, even accounting for differences in median household income, with the same credit availability in both places.
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Cool.
What I meant was the banks keep the wheel turning.
Something fucks with their ability to lend and the wheel stops turning.
I'm merely highlighting the absolutely central role of bank lending.
Wow, and again, after 10 pages, we get to the revelation that the banking system is central to the operation of the economy and the monetary system in a modern capitalist economy. Good stuff!
Not all money is issued as debt, that statement is 100% false.
Then how is the money not issued as debt issued then?
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If you do not know why then don't post on this topic as your knowledge on money supply is basic at best.
But you claimed you could educate me on this! Tell me Michael, how does money that is not issued as debt get issued? Does the RBA print cash and toss it from tall buildings every 3rd full moon?
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Others have already explained to you the reasons, you just don't listen.
But I want YOU to explain it to me Mike, since you so graciously offered, implying your greater understanding of the monetary system than me. Up until this point I thought you were a laughably moronic f^ckwit, but I am generously offering you an opportunity to completely change that perception. Impress me Mike, you have my full attention!
peter fraser
16 Jul 2013, 10:11 PM
Banks create money as you say with a credit offsetting a debit, but a government can create money without the offsetting credit. Governments can also destroy money.
How does government create money Peter? Do they issue money? Who do they issue it to?
barns
16 Jul 2013, 11:09 PM
Incorrect. Interest is a debit to the borrower and a credit to the lender (depositor) with the interest margin paying banker's wages and other costs plus some left over to pay bank shareholders. Every dollar of bank charged interest is accountable, taxable and just like any other service - the service of lending money.
Every dollar is lent. To pay interest on loans outstanding, more must be lent.
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Interest is a debit to the borrower and a credit to the lender (depositor)
This is only true of money lent at discount. Money lent at interest does not balance because the liability is larger than the asset. If a tribe has 1000 pebbles, and the chief pebble honcho lends out 1000 pebbles for one year at 3% interest, the 1000 pebbles the tribe holds collectively can never extinguish all of the loans, without finding another 30 pebbles, or painting 30 of the pebbles to make them worth 2 pebbles. In the first instance, pebble productivity needs to improve this year, the second instance is what Zimbabwe did.
Every dollar is lent. To pay interest on loans outstanding, more must be lent.
This is only true of money lent at discount. Money lent at interest does not balance because the liability is larger than the asset. If a tribe has 1000 pebbles, and the chief pebble honcho lends out 1000 pebbles for one year at 3% interest, the 1000 pebbles the tribe holds collectively can never extinguish all of the loans, without finding another 30 pebbles, or painting 30 of the pebbles to make them worth 2 pebbles. In the first instance, pebble productivity needs to improve this year, the second instance is what Zimbabwe did.
I think you are confused. The pebbles are just like bank notes they are a means of exchange, you don't need the same number in existence as claims on them. They just have to be generally acceptable for exchange. What if there is 1 hairdresser in the tribe and it cost 3 pebbles for a haircut. When he cuts your hair you don't need to create 3 more pebbles to pay him. It's exactly the same with interest, it's just a payment for a service.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
I think you are confused. The pebbles are just like bank notes they are a means of exchange, you don't need the same number in existence as claims on them. They just have to be generally acceptable for exchange. What if there is 1 hairdresser in the tribe and it cost 3 pebbles for a haircut. When he cuts your hair you don't need to create 3 more pebbles to pay him. It's exactly the same with interest, it's just a payment for a service.
What if, it cost 3 pebbles for a haircut and 6 pebbles for a fish? You give the hairdresser 1 fish, and he supplies you with 2 haircuts. No pebbles created or destroyed. When you pay 3 pebbles in interest, you receive nothing in return, so the trade does not balance. If the number of pebbles out on loan is equal to the total number of pebbles, you cannot pay back the loan and the interest through trade, because trade does not change the number of pebbles, it is simply an exchange. Interest is a payment of pebbles, but nothing is received in return, therefore it is NOT trade.
And no, I am not confused. We went through this with lawnmowers 6 months ago. Fiat money has no productive limit, so you can always create more of it (by lending it) to pay back the interest on the money already lent, but that is the ONLY way you can pay back interest in a debt-money system. While it is true that loans repaid destroys money, loan repayments are always reloaned, so that existing debtors can pay back their loans with interest. All of this assumes that the economy will ALWAYS grow. If the economy contracts, the only way to repay interest on loans is to lend money at negative interest rates.
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