THE Credit Bubble Thread (merged)

by **bobcousins** » Sun 22 May 2005, 15:24:57

$this->bbcode_second_pass_quote('spot5050', '
')What is "unsound debt"?!

Only on PO.com can you get away with making such ridiculous statements without anyone questioning you. What are unsound debts? Unsound debts - a concept unheard of previously, but presented here as fact, and not questioned by anyone. PO.com is weird. Weird weird weird.

by **spot5050** » Sun 22 May 2005, 15:50:37

$this->bbcode_second_pass_quote('bobcousins', 'B')ad debt
From Wikipedia, the free encyclopedia.

In accounting and finance, bad debt is the portion of receivables that can no longer be collected, typically from accounts receivable or loans. Bad debt in accounting is considered an expense.

by **spot5050** » Sun 22 May 2005, 16:05:16

Sorry bobc, that was totally uncalled for on my part.

If I could take it back I would. Far too personal, sorry.

by MD » Sun 22 May 2005, 19:30:05

$this->bbcode_second_pass_quote('spot5050', '')$this->bbcode_second_pass_quote('MD', 'I') am looking for economic discussion...

by **Cojock** » Tue 24 May 2005, 15:11:00

$this->bbcode_second_pass_quote('', ' ')It's interesting that it looks as if po will occur at approximately the same time as peak-debt. When we look back at the peak from a post-peak viewpoint, maybe the coincidence of the debt-peak and oil-peak will have seemed predictable; like we should have seen them both coming.

Logically it makes sense that post-peak, debt will fall. The higher interest rates are, the less people want to borrow. As oil gets more expensive, prices of everything go up, ie. inflation goes up, so the central banks raise interest rates to control their money supplies. So almost by definition, does po mean peak-debt.

by **jaws** » Tue 24 May 2005, 16:28:47

$this->bbcode_second_pass_quote('Cojock', 'I') suspect that you do not understand what our current Money is and how it is created. In the UK only 3% of money in circulation is cash which is non-interest-bearing.

The other 97% in circulation is loaned into existence by "Credit Institutions" ie Banks or Building Societies and two third of this came into existence as mortgage loans. Unfortunately, when Credit Institutions create this Money they do not create the necessary credit/money to pay the interest on it.

Which is why Money and Debt (two sides of the same coin) increases exponentially: why we are driven to "Economic Growth " regardless of the effect on the planet - and why there can be no such thing as Peak Debt unless we are able to create a form of non-interest bearing Money with which interest-bearing debt/money may be repaid.

by **nero** » Tue 24 May 2005, 17:56:56

I'll just jump in here and agree with jaws. I'm tired of that fallacy being repeated as well. I wonder, why is it so darn popular in these forums. Where exactly do you guys pick up this meme? Is it from Heinberg or do you get infected only once you start reading about this idea on PO.com?

by **threadbear** » Tue 24 May 2005, 20:56:31

$this->bbcode_second_pass_quote('spot5050', '')$this->bbcode_second_pass_quote('RG73', 'I')nstead of making smug proclamations about why MD's word choice is incorrect you could actually enlighten us as to why the question, and the proposition of unsound debt that it depends on, are absurd.

by **nero** » Tue 24 May 2005, 21:00:49

$this->bbcode_second_pass_quote('', 'I')sn't it the fact that the money is loaned into existence, not simply the interest, that causes the growth requirement?

(please don't hit me, guys, I'm totally baffled by all this finance voodoo and just trying to understand)

by **threadbear** » Tue 24 May 2005, 21:26:51

$this->bbcode_second_pass_quote('threadbear', '')$this->bbcode_second_pass_quote('spot5050', '')$this->bbcode_second_pass_quote('RG73', 'I')nstead of making smug proclamations about why MD's word choice is incorrect you could actually enlighten us as to why the question, and the proposition of unsound debt that it depends on, are absurd.

by **nero** » Tue 24 May 2005, 23:32:36

$this->bbcode_second_pass_quote('threadbear', 'D')amn--I thought someone would instantly spot my stream of consciousness nonsensical post. Oh well. It really reads like something completely incomprehensible in an economics book.

by **Antimatter** » Wed 25 May 2005, 01:19:33

$this->bbcode_second_pass_quote('nero', 'I')'ll just jump in here and agree with jaws. I'm tired of that fallacy being repeated as well. I wonder, why is it so darn popular in these forums. Where exactly do you guys pick up this meme? Is it from Heinberg or do you get infected only once you start reading about this idea on PO.com?

by **threadbear** » Wed 25 May 2005, 16:58:44

Here's something that says it better than I did, I just found it on another thread-Tipping Points.

"This derivative market continues to expand and the amount of leverage in the world’s financial system also continues to expand exponentially with breakthroughs in financial engineering. The financial economy has grown to be so much larger than the real economy, which is a reflection of the true rate of inflation. The real economy is where widgets are made, factories are built, oil is found, minerals are mined, plumbing is fixed, children are educated, and the sick are healed.

On top of the real economy lies the financial economy made up of bank and central bank credit, mortgage securitization and derivatives. This is where the real outlet for inflation has taken its course. It is a world of excesses — excesses in credit, excesses in speculation, and excesses in risk-taking. This is where the real danger of risk contagion will have its genesis."

http://www.kitco.com/ind/Puplava/may242005.html

Please Spot5050 and others, read this article. You then, at least will know where people here are coming from, whether you agree or not.

by **threadbear** » Sat 28 May 2005, 15:54:14

From the master Machinehead, himself. His comments on Doug Noland's theme about the closed loop nature of the economy. Machinehead is hands down the best analyst out there, but labours in relative obscurity on this message board.

"Bingo -- most economics textbooks are from the industrial (capital investment) era, not the Asset Bubble (financial investment) era. A secular change has occurred.

Doug then takes direct aim at the 'conundrum' -- the puzzle of how, in contrast to normal experience, we can borrow more and more without driving up rates to restrict demand:

http://www.indexcalls.com/forums/index. ... #entry9622

This is what I was trying to explain the other day by comparing the economy today with incestuous inbreeding, and the attendant degradation of the offspring or currency.

I hope it's okay to link to this economic/political forum. The posters there have been of great help to me personally, just because of the non-dogmatic, clear thinking. It's refreshing

by MD » Mon 27 Jun 2005, 18:59:36

Today seems a good day to resurrect this thread, given the current BIS news story...

by **RdSnt** » Mon 27 Jun 2005, 21:11:19

$this->bbcode_second_pass_quote('Tyler_JC', '
')
So, yeah, we're screwed. I'm not even sure if the Dow will be above 1000 for the rest of the decade. BTW, have you ever read any of Jim Puplava's stuff? http://www.financialsense.com/

by **max_power29** » Tue 28 Jun 2005, 15:18:14

$this->bbcode_second_pass_quote('nero', 'I')'ll just jump in here and agree with jaws. I'm tired of that fallacy being repeated as well. I wonder, why is it so darn popular in these forums. Where exactly do you guys pick up this meme? Is it from Heinberg or do you get infected only once you start reading about this idea on PO.com?

by **max_power29** » Tue 28 Jun 2005, 15:24:58

$this->bbcode_second_pass_quote('jaws', '')$this->bbcode_second_pass_quote('Cojock', 'I') suspect that you do not understand what our current Money is and how it is created. In the UK only 3% of money in circulation is cash which is non-interest-bearing.

The other 97% in circulation is loaned into existence by "Credit Institutions" ie Banks or Building Societies and two third of this came into existence as mortgage loans. Unfortunately, when Credit Institutions create this Money they do not create the necessary credit/money to pay the interest on it.

Which is why Money and Debt (two sides of the same coin) increases exponentially: why we are driven to "Economic Growth " regardless of the effect on the planet - and why there can be no such thing as Peak Debt unless we are able to create a form of non-interest bearing Money with which interest-bearing debt/money may be repaid.

by **max_power29** » Tue 28 Jun 2005, 15:27:14

Our whole economy is a giant Ponzi (pyramid) scheme. A scam.

by **nero** » Wed 29 Jun 2005, 00:49:39

$this->bbcode_second_pass_quote('max_power29', 'I')t (fractional reserve banking) is actually taught in money and banking classes at universities by professors of economics, at least at the university of oregon in my experience. So the "fallacy" did not originate with Heinberg or PO.com at all. Its common knowledge for people that have been educated in finance in college.

THE Credit Bubble Thread (merged)

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