Is Debt A Major Cause Of Inflation?


Liberalman
Free Thinker
#1
Is Debt A Major Cause Of Inflation?

I was watching Glen Beck TV or GBTV online and a reporter was sent into the Wall Street protests to interview people.

One person said debt was one of the problems for the crisis and it should be eliminated to which the reporter said “if there was no access to debt then no one could buy a house”.


What a powerful statement and how wrong the reporter was because if no one could get access to debt then the price of a house would be a lot lower and more affordable.

If no one were in debt people would not need more money to live.

The government or the taxpayer is bailing out the wrong people they have decided to bail out businesses to the tune of trillions of dollars but they never reduced they’re prices to the consumer and the cost of borrowing money on credit cards never came down.

The government should have bailed out the people that had loans that they had a hard time paying back and put the chains back on the lending institution on how they conduct business like they had back in the 1970s where if one charged more than twenty per cent here in Canada it would be considered loan sharking.

The government should put more stringent rules on moneylenders so that people could get out of debt faster.

The government should also put more rules on moneylenders that would make mortgages only available with no renewal terms where one has to renegotiate at five-year intervals it should be for the life of the mortgage.

The government should also make the money lenders offer other types of mortgages like the ones that some smaller banks offer to people that are prohibited from paying interest like some religious groups where they buy a house and a certain amount of units are calculated and a rent is paid and as the units are purchased at a set price then the rent is decreased until all units are purchased and the deed is issued.

We also have to remember the social problems that debt causes like poverty, suicides, domestic violence and more.

With no debt the economy will come back to life and more jobs will start appear because the people will start to spend again.

What do you think?
 
TenPenny
+3
#2
If no one had access to debt, business would come to a halt. Stores would have no stock, as they couldn't borrow money to buy things. Farmers couldn't plant crops. People couldn't buy cars or houses. Until one person spent money on something, nobody would have money to spend on anything.

To magically believe that if nobody could borrow money to buy a house, housing prices would fall is amazing. That implies that houses are made of nothing except inflation.
 
Liberalman
Free Thinker
#3
Quote: Originally Posted by TenPenny View Post

If no one had access to debt, business would come to a halt. Stores would have no stock, as they couldn't borrow money to buy things. Farmers couldn't plant crops. People couldn't buy cars or houses. Until one person spent money on something, nobody would have money to spend on anything.

To magically believe that if nobody could borrow money to buy a house, housing prices would fall is amazing. That implies that houses are made of nothing except inflation.

Stores would start small and as sales increased the profits would buy more stock, a farmer starts small then the harvest would buy more seed. People sell houses at market prices and if they are motivated sellers they will sell it at a lower price if there is few offers.

When the bubble bursts in the real estate market this means less buyers to sellers therefore inflation dictates house prices
 
Tonington
+4
#4  Top Rated Post
Not all debt is bad...how many people do you imagine would get post-secondary education? I couldn't have, I am affording my payments now, though they are fairly large. But without loans I could not have gone through university, in fact most students could not.

I bet the person who told the reporter they think debt should be eliminated is a college grad who can't find work.
 
SLM
No Party Affiliation
+3
#5
There's no reason to reinvent the entire wheel here.

Debt is a part of life. Excess debt does not have to be.
 
TenPenny
#6
Quote: Originally Posted by Liberalman View Post

Stores would start small and as sales increased the profits would buy more stock, a farmer starts small then the harvest would buy more seed. People sell houses at market prices and if they are motivated sellers they will sell it at a lower price if there is few offers.

When the bubble bursts in the real estate market this means less buyers to sellers therefore inflation dictates house prices

You are assuming that a house doesn't cost anything to build, but other than that, you've got it nicely figured.

It would be interesting to see how you plan to handle the huge unemployment problem, since nobody could have a job until someone could afford to pay them. Also, governments could not do anything until they had money.

Without debt, every bill would be due immediately, and if you extend that to payrolls, every employee would have to be paid ever hour, and would have to submit payroll taxes every hour. Running a store would be interesting, because, without debt, sales taxes would have to be remitted to the government immediately upon making the sale.
 
Cliffy
Free Thinker
+2
#7
It is the economic system that is at fault. It has devolved from what it was to what it is over many hundreds of years. The probvlem is, it is broken (and broke) because of mismanagement and greed. It is beyond fixing and its collapse is inevitable. It would be prudent at this point to invent a new system. There are people working on this problem as we speak.

The Zeitgeist Movement: Orientation Presentation

Also, from the New Internationalist:
At New Internationalist we see this as a sign of hope. National governments are either too weak or too compromised in their dealings with the current global financial order. An international citizens’ movement is the only way to convince states to act in the interests of their people. There is now a growing popular movement to redesign the Bretton Woods architecture from the ground up. And that means more than just tinkering with the wiring. Instead, we need a radical rethink that will put humans in control, at the heart of the global economy. The goal should be a new international financial architecture that will restore the social vision of meaningful employment and human rights. One that will prejudice the local over the global. And one that will restore the ecological health and natural capital of our planet.

Full article: Keynote -- New Internationalist

And this just barely scratches the surface.
 
Kreskin
+1
#8
I would argue that inflation isn't always bad thing. All the 'good old days' came with it. Anyone who bought a home in the 60's were mortgaged to the hilt in their day but they inflated their way out of debt in 70's and 80's. A 20k mortgage in the 60's would've felt humongous, but 20 years later it was chump change.
 
petros
+1
#9
Quote: Originally Posted by TenPenny View Post

If no one had access to debt, business would come to a halt. Stores would have no stock, as they couldn't borrow money to buy things. Farmers couldn't plant crops. People couldn't buy cars or houses. Until one person spent money on something, nobody would have money to spend on anything.

To magically believe that if nobody could borrow money to buy a house, housing prices would fall is amazing. That implies that houses are made of nothing except inflation.

Debt is a relatively new concept. I'm not all that old or even a spring chicken but I remember the days when if you didn't have the money you saved to buy it or got it on layaway.

Quote: Originally Posted by Cliffy View Post

It is the economic system that is at fault. It has devolved from what it was to what it is over many hundreds of years. The probvlem is, it is broken (and broke) because of mismanagement and greed. It is beyond fixing and its collapse is inevitable. It would be prudent at this point to invent a new system. There are people working on this problem as we speak.

The Zeitgeist Movement: Orientation Presentation

Also, from the New Internationalist:
At New Internationalist we see this as a sign of hope. National governments are either too weak or too compromised in their dealings with the current global financial order. An international citizens’ movement is the only way to convince states to act in the interests of their people. There is now a growing popular movement to redesign the Bretton Woods architecture from the ground up. And that means more than just tinkering with the wiring. Instead, we need a radical rethink that will put humans in control, at the heart of the global economy. The goal should be a new international financial architecture that will restore the social vision of meaningful employment and human rights. One that will prejudice the local over the global. And one that will restore the ecological health and natural capital of our planet.

Full article: Keynote -- New Internationalist

And this just barely scratches the surface.

You realize those Zeitgeist types are hard core Marxists and eugenicists?
 
Cliffy
Free Thinker
+1
#10
Quote: Originally Posted by petros View Post

Debt is a relatively new concept. I'm not all that old or even a spring chicken but I remember the days when if you didn't have the money you saved to buy it or got it on layaway.

You realize those Zeitgeist types are hard core Marxists and eugenicists?

As opposed to hard core capitalist pigs, war mongers and corrupt politicians? I was looking at their monetary ideas, not their political views.
 
petros
#11
Quote: Originally Posted by Cliffy View Post

As opposed to hard core capitalist pigs, war mongers and corrupt politicians? I was looking at their monetary ideas, not their political views.

You can't seperate them. A better idea is NESARA if it ever gets made official law.
 
Cliffy
Free Thinker
#12
I never said I endorsed them. I was talking about people trying to redesign the economy, those were the first two that came up.

The point is that the present system is broken and I doubt that any fixing or modification will do anything more than prolong the agony.
 
petros
#13
Quote: Originally Posted by Cliffy View Post

I never said I endorsed them. I was talking about people trying to redesign the economy, those were the first two that came up.

The point is that the present system is broken and I doubt that any fixing or modification will do anything more than prolong the agony.

Read the book Draining the Swamp.

The only fix to the financial system is to cap proprtional lending and go back to a specie backed dollar.
 
TenPenny
#14
Quote: Originally Posted by petros View Post

Debt is a relatively new concept. I'm not all that old or even a spring chicken but I remember the days when if you didn't have the money you saved to buy it or got it on layaway.

You have a different idea of debt; please enlighten us as to what it means.

Mortgages have been around for ages, GMAC started in the 1920s with buying cars on time. Debt has existed as a business concept for longer than you could possibly be alive.
 
petros
#15
Credit for a cars started in the 50's. A 55 for $55 was the slogan.

Mortgages also started post WW2
 
CDNBear
#16
Quote: Originally Posted by petros View Post

Credit for a cars started in the 50's. A 55 for $55 was the slogan.

Mortgages also started post WW2

GMAC was founded in 1919. Specifically to lend money, for the purchase of cars.
 
petros
+2
#17
I stand corrected on cars. Thanks.
 
CDNBear
#18
Quote: Originally Posted by petros View Post

I stand corrected on cars. Thanks.

You get props and respect for that, which makes this hard to do...

http://en.wikipedia.org/wiki/Nationa...s_of_the_1930s


 
petros
+1
#19
Thanks again. I know now what threw me off. It was the qualifications, long term mortgages, down payment ratios and insured loans that were introduced and revamped post WW2. They weren't easy to get.
 
Liberalman
Free Thinker
#20
Quote: Originally Posted by Tonington View Post

Not all debt is bad...how many people do you imagine would get post-secondary education? I couldn't have, I am affording my payments now, though they are fairly large. But without loans I could not have gone through university, in fact most students could not.

I bet the person who told the reporter they think debt should be eliminated is a college grad who can't find work.

No debt means post secondary education would be cheaper and more condensed without the mandatory courses you don't need which would mean a degree in two to three years instead the four
 
petros
+1
#21
Quote: Originally Posted by Liberalman View Post

No debt means post secondary education would be cheaper and more condensed without the mandatory courses you don't need which would mean a degree in two to three years instead the four

You can already get a three year degree. Two if you don't take summer off.
 
Kreskin
+1
#22
Could you mom lend you money or would that be illegal? If she did would it be illegal for her to charge interest, and if so wouldn't that make her money worth nothing?
 
petros
#23
If it gets your kid out of the house and into the workforce, the reward is infinite.
 
wulfie68
No Party Affiliation
+1
#24
Quote: Originally Posted by petros View Post

Debt is a relatively new concept. I'm not all that old or even a spring chicken but I remember the days when if you didn't have the money you saved to buy it or got it on layaway.

No, its not. Debt has been around as long as there has been a banking system, because that is the primary vehicle banks/lenders have always utilized to make money. Lenders/bankers existed in the Roman Empire, if not farther back. In the middle ages usury was forbidden to Christians, by the Church, which is why some Jewish families became prominent in finances, because someone needed to fill the void and they were looking for a way to make themselves more invaluable and immune from the prejudices of the Christian majority in Europe.

Debt leveraging has increased in popularity with the rise of the middle class, and particularly in the 20th century. Part of the reason for the explosiveness of the 1929 stock market collapse was small investors, going farther into debt than they could handle, and losing everything (or near to it) when the market corrected, and markers on leveraged investments (speculations in most cases) were called in. In the last 50 or so years, with the explosion of consumerism, debt rates have become more exagerated.

As to some moron thinking that debt is the reason for inflation, well, thats Glen Beck logic for ya. Increases in the standards of living cause inflationary pressure but personal debt is not the reason: rising prices in commodities/products are. Now if we reduced our debt loads, our standards of living would probably increase, as we could spend more money on what we want, rather than on servicing our debts, but thats really a choice people have to make for themselves... and it still doesn't make the price of a tank of gas or a side of beef go down.
 
captain morgan
Bloc Québécois
#25
Quote: Originally Posted by Liberalman View Post

No debt means post secondary education would be cheaper and more condensed without the mandatory courses you don't need which would mean a degree in two to three years instead the four

You do understand that there would still be a cost to deliver this education, right? The money has to come from somewhere.
 
Liberalman
Free Thinker
#26
Quote: Originally Posted by TenPenny View Post

You are assuming that a house doesn't cost anything to build, but other than that, you've got it nicely figured.

It would be interesting to see how you plan to handle the huge unemployment problem, since nobody could have a job until someone could afford to pay them. Also, governments could not do anything until they had money.

Without debt, every bill would be due immediately, and if you extend that to payrolls, every employee would have to be paid ever hour, and would have to submit payroll taxes every hour. Running a store would be interesting, because, without debt, sales taxes would have to be remitted to the government immediately upon making the sale.

With no access to debt the houses would be cheaper because the materials to build it would be cheaper and wages would be cheaper.

No access to debt would not mean a higher jobless rate, a person would have more money to spend but it would make the companies more responsible in their hiring practices.

The government should not do anything until they have the money and spend it on the more important things instead of sending it out to other countries to solve their problems. You have to remember that the government takes a percentage from the income so whatever monies they get that’s all they would spend.

Paying bills immediately is OK because you would not have to pay it later.

Payrolls would be met if you change hourly wages to salaries paid daily, weekly, biweekly or monthly so you do not have to pay it hourly as you suggest.

I would prefer to get a daily cash payment like in the old days.

TenPenny with the invention of the computer sale taxes could be paid to the tax account as it is collected from the consumer. When you buy online with a debit card it is taken from your bank account immediately.

Quote: Originally Posted by captain morgan View Post

You do understand that there would still be a cost to deliver this education, right? The money has to come from somewhere.

There would be a cost of delivering the education and the money would come from your savings account and since the post secondary schools is all about enrolments they would offer the programs at a cheaper rate
 
captain morgan
Bloc Québécois
#27
Quote: Originally Posted by Liberalman View Post


There would be a cost of delivering the education and the money would come from your savings account and since the post secondary schools is all about enrolments they would offer the programs at a cheaper rate

The point I am driving at is that the real cost of delivering that education would be marginally cheaper at best.
 
petros
#28
If I lend you the only $20 in existance and want repayment of $25, where does it come from?
 
Liberalman
Free Thinker
#29
Quote:

by wulfie68
Increases in the standards of living cause inflationary pressure but personal debt is not the reason: rising prices in commodities/products are

One of the reasons for inflationary preasures is people have more access to debt
 
Kreskin
#30
Quote: Originally Posted by petros View Post

If I lend you the only $20 in existance and want repayment of $25, where does it come from?

Supply and demand, just like anything else. If there is a value to it then you make more. If there isn't you don't.
 

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