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I could spend on my credit cards, or borrow form the bank, so to say it is impossible to borrow, is simply not true. Most people simply choose not to take on more debt at this time. If they did, then consumer spending would rise, so I am not saying debt is evil. I don't know why you think someone said all debt is bad. I think spending and debt taking will pick up as soon as housing market picks up. Spending will expand the economy, and shrink the national debt vs GDP ratio.
Short term, it is true that more personal debt will increase consumer spending. Long term, it reduces it. Every dollar spent on interest payments and paying off past debts is a dollar not available to spend on your wants and needs now. It's all to easy to rack up enough in debt payments where even with a decent income there is very little left over at the end of the month to "stimulate the economy". The credit crunch is an overdue reminder that this is true. In the medium-long term we as individuals will be far better off for learning that painful lesson.
Your credt card spending isnt going to bump up the economy because you have to take money out of the economy in order to pay it back. It just changes when it gets spent.
And no one said it was impossible, but its clearly far more difficult to borrow now than a few years ago. Dont pretend its not.
It is more difficult if you have poor credit. As it should be. When we last refinanced our house I had all sorts of takers.
We could have raised rates as opposed to cutting them. People would then have had even more of an incentive to save while making extra money to spend all without going into more debt.
Yes, but raising rates would've driven us into a genuine deflationary depression, i.e. a deflationary spiral.
Keeping rates ultra-low has allowed us to keep our head above water while the private sector debt slowly cleanses itself. I suppose the real question is about future quality of newly-minted debt, not quantity, and I'm not optimistic.
It is more difficult if you have poor credit. As it should be. When we last refinanced our house I had all sorts of takers.
But its not the governments responsibility to tighet credit to make sure you dont overspend. They should encourage you to save, but leave the options to you.
Your credt card spending isnt going to bump up the economy because you have to take money out of the economy in order to pay it back. It just changes when it gets spent.
Spending helps the economy. Take my word for it. It is true that eventually you'll be spending your money on intereste payment, but for now it woud help the economy.
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And no one said it was impossible, but its clearly far more difficult to borrow now than a few years ago. Dont pretend its not.
Yes, thank goodness for that. During the housing bubble and the Bush admin fanning the fires, they were practically forcing loans down people's throats, and now their credit ratings are ruined.
Just for the record, that graph shows what the government claims is the inflation rate, not what it actual is/was.
Indeed, and he obviously didn't process the part where I said: "Some asset classes." (which is partly why he's on ignore, but that's another story.)
Most notably, land, because that is what most of the private sector lending goes toward buying. Seeing as how PGH made his money in real estate, you'd think he'd know that real estate has risen in price lately. You can also include the sort of assets that corporations buy and hold for long-term returns, like mines, forestland, metals, oil, etc. , and you can also include debt-financed endeavours like college (look at how college tuition has risen.)
CPI isn't too sensitive to private-sector lending because people generally don't take out long-term debt in order to buy food and gasoline. CPI is totally meaningless as a measure of asset inflation.
Yes, but raising rates would've driven us into a genuine deflationary depression, i.e. a deflationary spiral.
Why?
We have many retiree's who expected their savings to get them through the rest of their lives. When rates went to near zero, they had to go back to work. They took many of the jobs the younger folks would have taken.
If rates were a bit higher, their income would be restored to where they could retire again and afford to live the life of a retiree and a slew of jobs then become open. So you would have retiree's with money to spend and the younger generation with jobs and money to spend.
Sure, if we have rates like 20% under Carter things get bad. We want things to be "normal". Neither end of the equation is going to allow that to happen.
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Keeping rates ultra-low has allowed us to keep our head above water while the private sector debt slowly cleanses itself. I suppose the real question is about future quality of newly-minted debt, not quantity, and I'm not optimistic.
Record low rates allowed people to get into that debt. It allowed the government to get into so much debt.
The problem is in the idea that things absolutely must grow at some preconcieved rate. If a company makes 30 million is it really that bad if next year they make 31 million as opposed to the expected 33.3 million?
A company making 31 million is doing pretty well but Wall Street kills it's stock because they didn't make 33 million. To get there they move jobs overseas. How does all of this make sense?
But its not the governments responsibility to tighet credit to make sure you dont overspend. They should encourage you to save, but leave the options to you.
It's not the governments position to do any of it. Markets will find their natural level when left alone.
Golly, go figure. I thought the economy had been creating new debt under Obama?
turns out debt levels are shrinking. How about that!
People are frightened by what they see our federal government doing, so they are trying to pay down their debts and save money. We fear the coming economic storm that our government is bringing to our doorstep.
The people are trying to reduce their public and private debts, but not the federal government. The recent voting in California, to reduce the money being spent for public sector unions, and the steps taken by other states to lessen their debt. This shows that at the local level, people want to reduce debt, now we need to elect people to the federal government to do the same there.
Indeed, and he obviously didn't process the part where I said: "Some asset classes." (which is partly why he's on ignore, but that's another story.)
I'm just basing this off your first post but I really do not know your positions. If the graph showed true inflation Obama would be at 30%.
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