Good… that’s not how people should live
Posted on December 2nd, 2008 by bile Tags: Austrian School of Economics, Austrian Theory of the Business Cycle, credit, debt, deflation, economics, Goldman Sachs, Hank Pulson, inflation, Jim Rogers, Peter Schiff, prices, Ron Paul, us treasury secretaryApparently our favorite ex Goldman Sachs CEO and current US Treasury Secretary Hank Paulson said this today.
“Millions of Americans” are being denied credit or facing rising credit card rates, “making it more expensive for families to finance everyday purchases.”
So… everyday purchases are being made on credit? Maybe… just maybe… that’s why the economy is in the shitter. Why are people living on credit? Massive government incentives.
Yes it’s been said a million times by people like Ron Paul, Peter Schiff, Jim Rogers, Lew Rockwell and friends… but: You must live below your means. The illusion of prosperity will only last for so long. You can only borrow for so long. They will only lend for so long. At some point you must face economic reality. Wealth does not spring forth from magic government pixie gardens. All it does is create massive market distortions which collect over time and at some point reality snaps it back. It sucks but you deal with it now in the short term or you deal with it later for the long term.
5 Responses to “Good… that’s not how people should live”
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December 2nd, 2008 at 4:52 pm
I agree with your statement and also to applying it on a macro level. The US gov’t cannot afford to continue borrowing money to paper over these losses, or worse yet, attempt to “invest” in New Deal 2.0. However, where I think people like Schiff go wrong is what happens when/if China were to stop buying treasuries? They effectively lend us money to buy their goods. Folks like Schiff believe that at some point, the US economy will run off the rails and economies like China’s will effectively decouple. Without the American consumer sucking up the excess productivity from the rest of the world, who will they sell to? Thus far the dollar has actually strengthened as debts unwind and everyone deleverages and/or the dollar is seen as the safest relative store of value. (I’m guessing a combination of the two.) Do you see this as something temporary that will ultimately end in inflation as countries like China and Japan cut up our credit cards? You’re right that at some point they will refuse to lend, but who ends up worse off?
December 2nd, 2008 at 5:03 pm
I’ve been trying to sign up for the Blog of Bile 0% APR for 18 months credit card and I’m having some problems. The tech support person I keep talking to on the phone is awful. Is this the right place to post my question?
December 2nd, 2008 at 5:46 pm
No, you are looking for the Bosco Barter Card (TM). Payment in dollars is not accepted, only barter. I don’t know exactly how the details work, but I heard that you really, really, don’t want to miss a payment. Good luck, YMMV.
December 2nd, 2008 at 8:23 pm
Let me detail missed payments with the BBC (Bosco Barter Card) a little for you. Let’s say you purchase a cheap plastic doll at the dollar store. The BBC will cover your debt and give the dollar store one dollar from our bank. We will collect from you the amount of labor it takes for me to produce that doll or an object of equal value to me. Now it would take me a long time to learn the chemistry and refine the chemicals to make the plastic. It would probably take even longer for me to build the machines to machine the metals to make the mold. So lets say that doll is worth 5 years of labor to me. Consequently I also view plastic dolls as a form of “priceless magic” given to us by “beings from across a thousand seas”. Because of this I value them highly and would only accept 2,000 oxen for trade. So your choices are: A. 5 years of indentured servitude or B. 2,000 oxen. You decide.
December 2nd, 2008 at 9:51 pm
The fine print mentioned something about a BBU (Bosco Barter Unit), TCoEB (The Council of Elder Barters) and an angry Asian man. Are you sure this thing is legit?