Are you spending your way to disaster?

[miko2d]

Sixpence: How can they save any money if they don't have a job, because their company went out of business...

 People always have a job - even a lone person on an uninhabitad island can work to provide for himself without money, businesses, etc. In the modern economy people just use division of labor to increase mutual productivity rather than live in autarchy.

 A person who has all he needs stops working, thus releasing his workplace. A person who has unsatisfied needs can always work to satisfy needs of others in exchange for their goods/services. The reason people lose work is not because there can ever be supply exceeding demand but that misallocation of capital resources occured that caused oversupply in some areas and shortage in others.

 The most common factor causing misallocation of capital towards projects that will fail is artificial lowering of the interest rates below the free-market rate. That screws up the temporal structure of the capital big way, since long-term projects ate much more sensitive to the interest rates.

To say that consumer spending has nothing to do with a healthy economy is way off.

 In fact I said the opposite - consumer spending is always 100% of the economy. What consumers should be - and would be - buying and what workers would be producing without the state intervention is capital goods instead of consumer goods.
 That's it. Why the heck are you so fixated on the damn dryers refrigerators? What's wrong with buying/producing machinery, infrastructure and education?


fullback: I mean no disrespect, but I will not respond to your parsing because we are at such completely different levels of understanding.

 No problem. You do not have to make a convincing case for your prefered theory, just give people a chance to get interested in it, in case they want to study it in detail. I wish you mentioned which school of macroeconimics you relied on.

 As I've mentioned, the Austrian school does not recognise macroeconomic aggregates except in historical studies.


gofaster: I think its amusing that we're having a discusion about the evils of credit card debt when every single one of us used a credit card to register for this sim.

 It's not about what form of money one uses but about incurring debt. In my 14 years in US I have never ever had to pay credit card interest.
 Debt is good when is an investment in productivity increase - education, transportation, even house if it helps one work more efficiently. Debt for consumption is a different matter.

 miko

[lazs2]

go faster... in my family... if you even develop a limp you cause people to salivate.   Low blood sugar would be a death sentence.
lazs

[Zippatuh]

Originally posted by gofaster

You pay cash for your furniture, too?

Homeownership and buying big-ticket items on credit go hand in hand.

Absolutely do I pay cash for big ticket household items.  Rip the band-aid off quickly and get it done.  Maybe a 90 days same as cash but that’s it.  I learned my lesson quickly.

No unsecured debt and the car/boat will get paid off the beginning of the year.

Yes, everyone leverage as much as possible… I’ll be looking for another rental property in about a year or so.  I’m closing another at the moment.  Why?  Because he has too much in unsecured debt and is looking to get a quick dollar off his house and does NOT want to file bankruptcy.

Put the card down man, put it down.  Look at the balance and then walk around the house to see what you got for that money.  Um, nada.

[Ripsnort]

Originally posted by Zippatuh
Put the card down man, put it down.  Look at the balance and then walk around the house to see what you got for that money.  Um, nada.

I rarely have cash. My wallet is full of credit cards, one for gas, one for the grocery store, one for getting cash out of the bank, etc. etc.

The key is...the balances are paid for at the end of each month, prior to the billing cycle (and in some cases, the interest cycle)

[gofaster]

Originally posted by Ripsnort
I rarely have cash. My wallet is full of credit cards, one for gas, one for the grocery store, one for getting cash out of the bank, etc. etc.

The key is...the balances are paid for at the end of each month, prior to the billing cycle (and in some cases, the interest cycle)

Same here.  I don't like to carry around a lot of cash, mostly out of concerns for security.  If my wallet is ever lost or stolen (which has happened before) I can cancel my cards and simply be out around $40 in cash.  I pay my cards off (via online so as to avoid the 'lost in the mail' excuse rom the CC companies) each month.  I use the "same as cash" credit offers to buy big-ticket stuff like furniture and appliances so that I can build up the cash amounts in my bank account and get the interest from the money while paying zero interest on the loan.  I have three credit cards - Visa, Discover, Mastercard - but only use Discover so I can track the CC bill easier (the others are there in case the vendor doesn't take Discover).  For gas I use the little key fob "SpeedPass" thingy from Chevron so that I don't have to expose my wallet at the gas pumps at night.

Paying cash for big-ticket stuff is simply missing the opportunity to generate interest on money you already have.  If I can get 0% interest for 12 months on financing, I take it and make sure its paid off by the 10th month.

[Ripsnort]

Thumbs up Gofaster.  Credit card perks are certainly nice, aren't they? We do online banking too.

Make sure you never carry your SS number around in your wallet however. Identify theft is a really bad thing for your credit.

[FUNKED1]

You guys are so smart, thanks for the tips!































































Now how do I keep my garage floor warm in the winter?

[Ripsnort]

Originally posted by FUNKED1
You guys are so smart, thanks for the tips!



Now how do I keep my garage floor warm in the winter?

No problem. I'm islamic.

You need to put in pipes prior to pouring concrete. Incidently, these are popular in scandinavian countries.

[FUNKED1]

LMAO THAT WAS FRIKKIN FAST!!!

[Ripsnort]

Originally posted by FUNKED1
LMAO THAT WAS FRIKKIN FAST!!!

I'm a reply script for Ripsnort while he's working on another workstation. He's told you he's good at writing macro scripts...idjit.

[Twist]

Don't forget to hook a source of warm to hot water to the pipes or they won't work.

I had to throw that in, used to write manuals for the government.

[Sixpence]

Originally posted by miko2d
Sixpence: How can they save any money if they don't have a job, because their company went out of business...

1.) People always have a job - even a lone person on an uninhabitad island can work to provide for himself without money, businesses, etc. In the modern economy people just use division of labor to increase mutual productivity rather than live in autarchy.

 A person who has all he needs stops working, thus releasing his workplace. A person who has unsatisfied needs can always work to satisfy needs of others in exchange for their goods/services. The reason people lose work is not because there can ever be supply exceeding demand but that misallocation of capital resources occured that caused oversupply in some areas and shortage in others.

 The most common factor causing misallocation of capital towards projects that will fail is artificial lowering of the interest rates below the free-market rate. That screws up the temporal structure of the capital big way, since long-term projects ate much more sensitive to the interest rates.

To say that consumer spending has nothing to do with a healthy economy is way off.

 2.)In fact I said the opposite - consumer spending is always 100% of the economy. What consumers should be - and would be - buying and what workers would be producing without the state intervention is capital goods instead of consumer goods.
 That's it. Why the heck are you so fixated on the damn dryers refrigerators? What's wrong with buying/producing machinery, infrastructure and education?

miko

1.) This is the 21st century Miko. You live in the city, do you have land to grow your own food? Years ago people had land to farm, build, mill, etc. You are thinking that the barter system from centuries ago will work today. It won't. Good luck to you finding a back yard in manhattan. You seem to lean alot toward socialism, and while socialism is a good idea in concept, it has it's drawbacks. Somewhere in between socialism and capitalism is a good system.

2.) Anything bought by consumers would be consumer goods. What the state has to do with that, I have no idea. Infrastructure and education is purchased by consumers in a way- our taxes. So we do buy our infrastructure. But where the state(the people we elect) oversee the projects, you call it "state intervention".

[miko2d]

Sixpence: 1.) This is the 21st century Miko. You live in the city, do you have land to grow your own food? Years ago people had land to farm, build, mill, etc. You are thinking that the barter system from centuries ago will work today.

 I said nothing of that kind. Where do you get all that nuisance? I tried to give you a chewed down version of Say's Law but it probably went over your head.
 The demand and supply are always the same. People join workforce (by providing supply) because they have unsatisfied needs (which lead to demand). They supply economic goods and in the modern system of the division of labor they exchange them - in barter, via money, etc. It's goods for goods and money is just a medium of exchange which is not being consumed or used up. This is a basic principle and 21 century does not have anything to do with it.

 If peopel who need to consume and are willing to produce are prevented from working, it's due to state intervention into the economy. Neither unemployment not business cycles are natural to the free market capitalist economy - they are results of government intervention and/or lack of capitalism.


It won't. Good luck to you finding a back yard in manhattan. You seem to lean alot toward socialism,

 You are joking, right?

Somewhere in between socialism and capitalism is a good system.

 There is no "in betwen". There is free market capitalism and there is socialist breakdown of the division of labor and destruction of civilisation. There is no static state - a society either progresses towards free market or deteriorates towards socialism. Socialist economy is not a "bad system". It is a logical impossibility. Without private property and market-generated prices there is no basis for economic calculation. Now possible way to plan anything, to decide where to direct resources, etc.

What the state has to do with that, I have no idea.

 No surprise.

But where the state(the people we elect) oversee the projects, you call it "state intervention".

 The state diverts resources into projects that would not be undertaken under free market. The state restricts individual's participation in the ecomony causing unemployment. The state causes massive misallocation of capital by distortimg the signals generated by the price system. The misallocated resources are wasted when projects inevitably fall, causing more unemployment and disruption.

 Would you care to tell us in which way does the temporal capital structure affected when the interest rates are artificially lowered?

 miko

[miko2d]

P.S. It's curious how ignorant people call themsleves "progressives" and others "conservatives" and being obsolete for adhering to the 19th century free-market economic doctrines (elaborated and developed in 20th century) while they are nothing but proponents of the 16th century mercantilist policies. All that while throwing "21st century" around. Some progressives...
 Truly, ignorance is a bliss.

 miko

[LePaul]

Someday, not sure when, I'll really do more than skim one of Miko's wordy replies.  Its my new years resolution