Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Great Debates
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 12-16-2012, 08:17 AM
 
6,326 posts, read 6,557,946 times
Reputation: 7457

Advertisements

Quote:
Originally Posted by jayrandom View Post
Look at payday loan stocks; not a great investment. They make some money off the backs of the poor but not enough to be part of the investor class. The investor classes are investing in industries with higher profit margins.
If you live off investments that makes you a part of the investor class. Your political, taxation & economics self-interest is identical to that of the big investors. It takes solid "nest egg" to generate $30,000/year in all sorts of economic rents. As for the pay day loans, I believe most are franchises of some sort.
Reply With Quote Quick reply to this message

 
Old 12-16-2012, 08:25 AM
 
6,326 posts, read 6,557,946 times
Reputation: 7457
Quote:
Originally Posted by bcr229 View Post
While I agree, unfortunately too many high school grads these days are so bad at math that they can't balance a checkbook. How do you explain compound interest to someone who can barely add and subtract?

OTOH if the government sets a cap on interest rates then the people who are bad credit risks will be unable to obtain a loan from any legitimate lender.
$1 invested at 3% should generate $19 of returns in just 100 years. Since these rates of economic growths are physically impossible, financial pyramid must be brought back to reality using inflation and controlled rate of bankruptcies. If everybody will perfect his checkbook skills, it will not change predatory reality of the financial system. All money in your pocket is created as debt, you have just that much of control over repayment of your debts, bankruptcies are a Must to keep this system running.
Reply With Quote Quick reply to this message
 
Old 12-16-2012, 11:21 AM
 
Location: Westwood, MA
5,037 posts, read 6,888,537 times
Reputation: 5960
Quote:
Originally Posted by RememberMee View Post
$1 invested at 3% should generate $19 of returns in just 100 years. Since these rates of economic growths are physically impossible, financial pyramid must be brought back to reality using inflation and controlled rate of bankruptcies. If everybody will perfect his checkbook skills, it will not change predatory reality of the financial system. All money in your pocket is created as debt, you have just that much of control over repayment of your debts, bankruptcies are a Must to keep this system running.
There is real economic growth, fueled largely by innovation and capital investment. The idea is to take things of low value, and, using capital equipment, turn them in to things of larger value. 3% real growth is well within the bounds of possible; even in anemic times like these there is still some real growth.

Let's say I have an idea to turn $0.20 hunks of metal in to a new kind of wrench people are willing to pay $50 for, but I need equipment (machines, buildings, etc.) that costs $500k to make that idea work. Not having $500k, I borrow the money to buy the equipment (and pay the workers, etc.) with the promise to pay it back, with interest. Investors look at my idea, check the numbers, and think it will work, so they loan me the money. I make my wrenches, thus creating value out of thin air, and sell them to people, pay back my investors, and pocket the difference. I'm not sure why bankruptcies are necessary to keep that system going.

Of course, there are people who create no value, and just buy a meaningless symbol and sell it for slightly more. That's a zero-sum game and maybe that's what you're talking about. Bankruptcies aren't needed to keep this system running, either, though; just inflation.
Reply With Quote Quick reply to this message
 
Old 12-16-2012, 01:29 PM
 
6,326 posts, read 6,557,946 times
Reputation: 7457
Quote:
Originally Posted by jayrandom View Post
There is real economic growth, fueled largely by innovation and capital investment. The idea is to take things of low value, and, using capital equipment, turn them in to things of larger value. 3% real growth is well within the bounds of possible; even in anemic times like these there is still some real growth.

Let's say I have an idea to turn $0.20 hunks of metal in to a new kind of wrench people are willing to pay $50 for, but I need equipment (machines, buildings, etc.) that costs $500k to make that idea work. Not having $500k, I borrow the money to buy the equipment (and pay the workers, etc.) with the promise to pay it back, with interest. Investors look at my idea, check the numbers, and think it will work, so they loan me the money. I make my wrenches, thus creating value out of thin air, and sell them to people, pay back my investors, and pocket the difference. I'm not sure why bankruptcies are necessary to keep that system going.

Of course, there are people who create no value, and just buy a meaningless symbol and sell it for slightly more. That's a zero-sum game and maybe that's what you're talking about. Bankruptcies aren't needed to keep this system running, either, though; just inflation.

I don't see your point, inflation adjusted American GDP didn't grow 19 fold over 100 years. Neither did unadjusted GDP. Again, if all the money is created as debt to be repaid with interest, the only way to keep this system going is by incurring even more debt along the way in order to pay off older debts + interest. Debts are snowballing. In the past this snowball of debt was cleared up through economic downturns, bank runs, collapses, wars, etc.

If everybody would make the right bets (or the right kind of wrenches) this system of the snowballing debt could last into perpetuity? Exactly the same argument one could make about winning a lottery or moving up the social ladder (if we all would make the right choices wouldn't we all be like Gates or Buffet?). Are you sure that the machines those $50 wrenches are good for wouldn't become obsolete over the night, or workers wouldn't work longer and longer hours at their wages jobs to have any use for your $50 magic wrench, or machines would become so complex that it would decimate the number of people willing to buy your wrench, and so on. There are plenty of scenarios under which $500,000 invested in a magic wrench is nothing but waste.

Let's us look how much $1 invested at 2% interest should be worth in 1000 years. $398264651. In short you use circular logic to defend patently insane & suicidal system.

Last edited by RememberMee; 12-16-2012 at 01:40 PM..
Reply With Quote Quick reply to this message
 
Old 12-16-2012, 01:45 PM
 
Location: MO->MI->CA->TX->MA
7,022 posts, read 14,431,683 times
Reputation: 5569
Sure, why not? It's a free country with a free market so I'm all for it as long as those high rates (or any interest rate on loans) are disclosed very clearly and not enacted in a deceptive way.
Reply With Quote Quick reply to this message
 
Old 12-16-2012, 02:02 PM
 
Location: Oklahoma
6,808 posts, read 6,910,930 times
Reputation: 20954
Targeting the poor and desperate may be legal, but imo is not moral. And it goes well beyond the payday loan and Western Sky companies. Take a peek into any payday loan company on a payday (usually Thursday) and you will see the working poor paying off the previous week's loan and taking another one out. The company they work for doesn't pay a living wage, the loan company charges exorbitant interest rates and there is very little likliehood of the working poor getting off that treadmill. Loan sharks are generally viewed with disdain, but how are they any different from these payday loan places? Because they won't come and break your legs if you don't pay? Other than that, I can see no difference.
Reply With Quote Quick reply to this message
 
Old 12-16-2012, 09:17 PM
 
Location: Westwood, MA
5,037 posts, read 6,888,537 times
Reputation: 5960
Quote:
Originally Posted by RememberMee View Post
I don't see your point, inflation adjusted American GDP didn't grow 19 fold over 100 years. Neither did unadjusted GDP. Again, if all the money is created as debt to be repaid with interest, the only way to keep this system going is by incurring even more debt along the way in order to pay off older debts + interest. Debts are snowballing. In the past this snowball of debt was cleared up through economic downturns, bank runs, collapses, wars, etc.

If everybody would make the right bets (or the right kind of wrenches) this system of the snowballing debt could last into perpetuity? Exactly the same argument one could make about winning a lottery or moving up the social ladder (if we all would make the right choices wouldn't we all be like Gates or Buffet?). Are you sure that the machines those $50 wrenches are good for wouldn't become obsolete over the night, or workers wouldn't work longer and longer hours at their wages jobs to have any use for your $50 magic wrench, or machines would become so complex that it would decimate the number of people willing to buy your wrench, and so on. There are plenty of scenarios under which $500,000 invested in a magic wrench is nothing but waste.

Let's us look how much $1 invested at 2% interest should be worth in 1000 years. $398264651. In short you use circular logic to defend patently insane & suicidal system.
It's clear you don't understand my point. I suspect we could hash out a common understanding of these ideas over the course of a few months and finally wind up at a place where we could disagree on principles rather than because of misunderstanding. That's just too much work for such an unrewarding payoff, so let's just skip to the parts we'd eventually agree on:

The system will not last into perpetuity; nothing will. The universe will eventually end. People will eventually go extinct. We may achieve such material wealth that the concepts of economics will no longer be necessary (economics is only important when there is a scarcity of something).

As a side note, inflation adjusted GDP is not the right measure when arguing about 3% interest, unless it's interest that is 3% above inflation. There has been real (i.e. inflation adjusted) per-capita GDP growth though: Long-term real growth in US GDP per capita 1871-2009 — Visualizing Economics and it is approximately exponential. That's the curve the investment class (a group I am not a member of) can reasonably expect to have received in returns.
Reply With Quote Quick reply to this message
 
Old 12-03-2013, 02:21 PM
 
1,174 posts, read 2,505,688 times
Reputation: 1414
Quote:
Originally Posted by Glenfield View Post
"Western Sky loans are not available to consumers in California, Colorado, Maryland, South Dakota and West Virginia."

I think these rates are egregious. They clearly intend to prey on the poor. Does anyone know what these states have done to protect their citizens that others have not?
Actually, a contract with Western Sky is only enforceable on the reservation. If you don't pay them back, they have no recourse against a debtor who is located off the reservation other than to sell the debt to collections. The collections agency doesn't have any legal recourse either, but they can harass the heck out of you.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Great Debates
Similar Threads

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top