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Old 12-24-2012, 03:01 AM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,890
borrowing for consumption

Borrowing money for prudent investment is generally a good idea.
Borrowing money for basic consumption is never a good idea. That's why banks never loan money to those who desperately need it. GOV steps in to borrow money to give to those who desperately need it. Then, GOV takes up a collection (forced) from those who do have money.
Alternatively, GOV prints money and collects from EVERYBODY by way of currency inflation.

ALL of this money injected into the economy is debt. Many decades ago, when GOV injected a dollar of new debt money into the economy, it stimulated close to a dollar in new productivity. As time went on, these new dollars injected into the economy were used for consumption rather than for prudent investment. These new dollars carried an interest cost. This means that new debt is still a debt BUT, it has a declining return-of-investment.

In the early 60s, when a new dollar was created as debt, it resulted in about a dollar of GDP increase. In 1982, when a new dollar was injected into the economy, it created about 50 cents of increased productivity.
In the last several years, there has been NO INCREASE in productivity.
Every new dollar of debt created is pure debt that also carries an interest cost as well. We get a new dollar of debt plus a new interest burden so; every new dollar results in LESS wealth available for consumption.

GOV is printing about $ 85 billion a month. There is a fast-decreasing amount of wealth at the same time that there is a fast-increasing amount of currency. The productive economy is experiencing deflation and price deflation.

GOV is a different story.
"All political power comes from the barrel of a gun" chairman Mao
GOV continues to raise taxes and fees, You have no choice about paying.
Both GOV and banks can create currency from thin air. They have plenty of currency. This gives them an ever-increasing claim on an ever-decreasing amount of wealth. They can drive prices up with their wet-ink money.
Since they are the source of currency inflation, they CAN be the source of price inflation. The PTB prefer to keep price inflation low.

The natives get very irate when food gets too expensive. There are claims that food prices will continue to rise;
Watch: "The Global Food Crisis You Need To Prepare For Is Now Imminent"

The PTB need to inflate enough to rescue the financial system but, not so much that people starve. I don't trust them.
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