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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26383481 - 12/15/19 02:58 PM (6 months, 21 days ago)

You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit? Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.

The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually. Then there’s the repo market which the Fed is pumping even more “liquidity” into.

I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp

Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/

So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.

Welcome back btw a week goes by quick. :wink:


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

Judge Aaron Satie


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OnlineKryptos
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383595 - 12/15/19 03:47 PM (6 months, 21 days ago)

Inflation helps the worker more than the rich. At least in theory. If there was no inflation, then you could earn a bunch of money and sit on it and do nothing, while remaining rich. With inflation, money in your mattress doesn't hold value, and needs to be put back in circulation.

Of course, inflation also opens the door for speculation...


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Invisiblevault123
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Re: Rent, home ownership and the future of social classes [Re: Kryptos]
    #26383706 - 12/15/19 04:55 PM (6 months, 21 days ago)

Well you also have to consider that the rich spend far less on a percentage basis for daily maintenance expenses such as food and housing than the working class. Do you think a rich person gives a fuck if the price of milk or bread goes up by $0.17 this month? They won’t even notice it. I can tell you who will notice it are the hard working family’s who are barely getting by each week.

There are many family’s who have to make difficult decisions about which brands of food they can afford to eat. What the rich will notice much more than the price of household necessities is the 3% increase in revenue from selling those items that the workers buy.

Then you also have to consider the purchase power of the money both before and after a shiny new influx of cash into the market. Again the rich profit the most from new influxes of cash because they get the first cut. Which means the purchase power is at its highest. After the rich get and spend it into the system it gradually looses its value until it makes it down to the workers who are trying to decide what toys they can afford to buy their children at Christmas.


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

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OnlineKryptos
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383785 - 12/15/19 05:41 PM (6 months, 21 days ago)

Yeah, but without inflation, none of that happens to begin with. Someone with control of 50% of the money supply, like the half dozen richest people in the world, continues as such for the foreseeable future. That money simply ceases to exist, effectively.

Which makes it more valuable, from a money for good standpoint.


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Offlineqman
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383915 - 12/15/19 06:48 PM (6 months, 21 days ago)

Quote:

vault123 said:
You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit? Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.

The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually. Then there’s the repo market which the Fed is pumping even more “liquidity” into.

I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp

Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/

So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.

Welcome back btw a week goes by quick. :wink:




Interest rates are mainly determined by business inflation (wages and commodities) and not consumer inflation.  If the US working class is experiencing 3% in higher costs of living and wages only grow by 1%, that's called a lower standard of living, not inflation.

BTW, low interest rates don't mean more credit growth, in fact the link I posted showed how much lower credit growth has been since 2008.

Also, central banks around the world expanding their balance sheets has no ramifications at all because that money never enters the real economy. It stays contained in the financial markets. Billionaires don't spend very much money, it just sits there and does nothing.


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OnlineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26383971 - 12/15/19 07:25 PM (6 months, 21 days ago)

Quote:

vault123 said:
You don’t think central bankers setting interest rates to zero, near zero, or negative won’t encourage banks to lend more recklessly in pursuit of profit?



I don't see why lower interest rates would encourage banks to make more reckless loans?

Quote:

vault123 said:
Historically low interest rates are historic for a reason. That is why we are in uncharted waters. Negative yielding bonds are absurd. Interest rates can never be normalized again.



Why can't interest rates ever be normalized again?  If more money gets into the hands of more people, then there is more spending and more growth, pushing inflation up, which also pushes interest up.

Quote:

vault123 said:
The Fed has expanded its balance sheet to the point where it can never be normalized again. The Fed thinks they can keep all of this extra capital from bleeding into the system, but they can’t. It works it’s way into the markets eventually.



Why can't the Fed's balance sheet ever be normalized again?  The Fed pumped a ton of extra money into the economy (to prevent a 2nd Great Depression) by buying up Government securities, and now they can slowly sell those securities and take the money back out.

Quote:

vault123 said:
Then there’s the repo market which the Fed is pumping even more “liquidity” into.



The Fed has a lot of tools at its disposal.  Why do you think this is a problem?

Quote:

vault123 said:
I don’t believe the Fed is being honest about inflation because the metric they use to calculate it keeps changing. https://www.investopedia.com/articles/07/consumerpriceindex.asp



I agree, there is a lot of debate on how to best measure inflation.  Each has its pros and cons.

Quote:

vault123 said:
Do you really think the Fed taking us off of the gold standard in 1971 and devaluing the dollar by 98% had no impact on housing prices? http://pricedingold.com/us-dollar/



As I said before, I think it led to prices rising by ~3% per year.

Quote:

vault123 said:
So let’s say you’re right. Let’s say the Fed has it all under control, (correct me if I’m wrong that’s what I’m hearing) why is it a good thing that we get basically nothing in interest on our savings and the value is eaten away by 3% inflation each year? Why do we want to pay 3% more for the goods and services that we need this year then we paid last year? I see how that policy would help the rich, but anyone who is simply trying to work hard and save money is getting robbed by central bankers, and there is nothing they can do about it but spend their money before it looses even more of its value.



First of all, the Fed is trying it's best to satisfy out of control Government spending (deficit spending absolutely needs to be cut, but that's a Government problem and not a Fed problem).  People's incomes are historically going up at least on par with the cost of living, so inflation isn't really hurting anyone.  Of course, if you invest your money below the rate of inflation, you'll lose out, but there many different ways to invest, such as stocks, real estate, commodities, etc.

As I said before, I think our problems are caused by the Government, not the Fed.


--------------------
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OnlineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26383987 - 12/15/19 07:33 PM (6 months, 21 days ago)

Quote:

qman said:
Low interest rates don't mean more credit growth, in fact the link I posted showed how much lower credit growth has been since 2008.



Lower interest rates definitely means more credit growth than higher interest rates though.  And your chart showed credit is still growing, albeit not as fast as it used to.

Quote:

qman said:
Also, central banks around the world expanding their balance sheets has no ramifications at all because that money never enters the real economy. It stays contained in the financial markets. Billionaires don't spend very much money, it just sits there and does nothing.



That's a Government problem, not a Central Bank problem.  Governments should put more bailout money into Main Street and not Wall Street.


--------------------
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Invisiblebrk
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Re: Rent, home ownership and the future of social classes [Re: living_failure]
    #26384033 - 12/15/19 07:52 PM (6 months, 21 days ago)

I'd be interested to see what sort of figures you're working with to not be able to afford anything. I know exact figures might be a bit personal, but a general overview of the situation in Madrid would be cool.

For example in Adelaide where I live you can buy a crappy 3 bedroom house in a low/middle income suburb for $200,000-$250,000. That's sort of the bottom end (but still decent) of the market. The median house price 10-20km from the CBD is ~$500,000.

The median income here is $57,000 pa. so anyone that says it's not affordable to buy a house in Adelaide would be full of shit, and only looking in the fancy burbs.

Just curious how the figures compare to Madrid?


--------------------
"To the young it gives a vision of the dead and gone. While the old receive a passion to survive,
and the pattern picks the pockets of the palindrome, before the oscillating rhythm takes to flight..." - Rishloo



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Invisiblevault123
SangSpell

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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26384224 - 12/15/19 10:05 PM (6 months, 21 days ago)

I agree with most of this. There are a few issues I think we could argue over but nothing that I’m concerned enough about to bring up tonight. My main issue is that you seem to be making a distinction between the government and the Fed.

I know technically they are supposed to be separate, but for all intents and purposes are they really? You don’t think the Fed wouldn’t step in at any point if the government had an issue?


--------------------
"With the first link, the chain is forged. The first speech censured, the first thought forbidden, the first freedom denied, chains us all irrevocably."

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Re: Rent, home ownership and the future of social classes [Re: vault123]
    #26384243 - 12/15/19 10:22 PM (6 months, 21 days ago)

I agree with you that the Fed and Govt are essentially the same.  The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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OfflineSirTripAlot
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03] * 1
    #26384348 - 12/16/19 12:22 AM (6 months, 21 days ago)

I have issues with the FED, but they make decisions our politicians could not handle.


--------------------
“I must not fear.
Fear is the mind-killer.
Fear is the little-death that brings total obliteration.
I will face my fear. I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the fear has gone there will be nothing.
Only I will remain.”


Edited by SirTripAlot (12/16/19 12:22 AM)


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OfflineLoaded Shaman
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Re: Rent, home ownership and the future of social classes [Re: Lachlen] * 1
    #26386334 - 12/17/19 02:09 AM (6 months, 20 days ago)

Quote:

Lachlen said:
I think most people can do it. The outliers who can't or don't want to will not.

I think the idea itself has different degrees. It could be anywhere from three acres, a well, a wood stove, and electricity poles to 50 acres with a $4,000 dollar Amish cabin with propane and solar.

The point, I think, is not to rent, but to own -- even if a small amount.

I am telling you, when you move onto land, you become "rich." That is, Everything that used to be payed to rent now goes to your bank account. Further, one does not need to be physically fit. One can pay a bulldozer to level 3 fields for several hundred dollars, which comes easily after you live on land while working a full time job... banking money.

Then you start saving hard and rent out a place.

When you have a passive income earner (renter), you can start to think about retirement.

Put some money away into retirement.




Oh I'm not arguing the validity of your plan at all, brother. You could do it. I could do it. I'd bet more money, for both of us to invest in our plan, that 80%+ of people WON'T do it even if they have the ability to, lol. That's what I'm saying. People are usually so self-defeatingly cynical and negative they're their own worst enemy, more so than anything in the external world could ever be.

Refer to the last quote in my sig! :cool:


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OfflineLoaded Shaman
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386336 - 12/17/19 02:10 AM (6 months, 20 days ago)

Quote:

Falcon91Wolvrn03 said:
I agree with you that the Fed and Govt are essentially the same.  The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.




But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?


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OfflineBrian Jones
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Re: Rent, home ownership and the future of social classes [Re: Loaded Shaman]
    #26386518 - 12/17/19 06:53 AM (6 months, 20 days ago)

That was XUL that you were talking to two posts back.


--------------------
"The Rolling Stones will break up over Brian Jones' dead body"    John Lennon

I don't want no commies in my car. No Christians either.


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OnlineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: Loaded Shaman]
    #26386754 - 12/17/19 09:53 AM (6 months, 20 days ago)

Quote:

Loaded Shaman said:
Quote:

Falcon91Wolvrn03 said:
The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.



But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?



No, they wouldn't issue new securities to raise money for the Federal Government if the Government didn't need it.  They might sell the securities they recently bought to stimulate the economy to get money out of the system to keep the total money supply under control.  And it appears they've been doing just that for the past year:



--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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Offlineqman
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386781 - 12/17/19 10:08 AM (6 months, 20 days ago)



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OnlineFalcon91Wolvrn03
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Re: Rent, home ownership and the future of social classes [Re: qman]
    #26386870 - 12/17/19 11:07 AM (6 months, 20 days ago)

Yes, the Fed adjusts the money supply as required to keep things stable.  Should I be worried that it's the highest since December, but lower than the five year period before that?


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03]
    #26386944 - 12/17/19 12:11 PM (6 months, 20 days ago)

Quote:

Falcon91Wolvrn03 said:
Yes, the Fed adjusts the money supply as required to keep things stable.  Should I be worried that it's the highest since December, but lower than the five year period before that?




I don't see any worry about it. QE goes into the financial markets and stays there, we have 12 years of evidence to show it.


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Re: Rent, home ownership and the future of social classes [Re: qman] * 1
    #26387076 - 12/17/19 01:22 PM (6 months, 20 days ago)

It goes up and down.  Better for the Fed to have assets on their balance sheet than to be in a 2nd Great Depression  :shrug:


--------------------
I am in a minority on the shroomery, as I frequently defend the opposing side when they have a point about something or when my side make believes something about them.  People here get very confused by that and think it means I prefer the other side.


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OfflineLoaded Shaman
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Re: Rent, home ownership and the future of social classes [Re: Falcon91Wolvrn03] * 1
    #26389942 - 12/19/19 02:17 AM (6 months, 18 days ago)

Quote:

Falcon91Wolvrn03 said:
Quote:

Loaded Shaman said:
Quote:

Falcon91Wolvrn03 said:
The Fed is even accountable to Congress.  If Congress tells the Fed "We'd like to borrow $1 trillion this year", the Fed has no choice but to make it happen.  The Fed can't tell the Government to stop with the out of control deficit spending.



But it CAN continue to loan bonds to the government regardless of deficit and spending issues, correct (I'm willing to be wrong hence me asking)?



No, they wouldn't issue new securities to raise money for the Federal Government if the Government didn't need it.  They might sell the securities they recently bought to stimulate the economy to get money out of the system to keep the total money supply under control.  And it appears they've been doing just that for the past year:






Ah, this makes sense, and I think I knew this, but it was obscured by all the other data in my brain :cool:. Thank you, Falcon :thumbup:


Quote:

Falcon91Wolvrn03 said:
It goes up and down.  Better for the Fed to have assets on their balance sheet than to be in a 2nd Great Depression  :shrug:




Isn't that the truth.


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