A vague warning from the top

Originally posted by kaylaluv
Sounds to me like this senator just has a personal aversion to loans in general - not that he has any specific inside information.

This is what I am starting to think as well.

Originally posted by underduck

Originally posted by TheRedneck
"Anyone who borrows money for at least five years will lose everything they have."

I am lost on this as well. If the value of the dollar goes way down anyone in debt now is screwed already so ... Im boned. Sounds to me like the senator made an awkward comment and may have misspoke slightly. Unless he is just saying that everything financially is going down the toilet so minimize risk and dont go "further" into debt.

edit on 27-4-2012 by underduck because: (no reason given)

It is exactly the opposite. If the value of the dollar plummets, then you be able to pay off your car with the equivalent of a loaf of bread; your house with the equivalent of a car. A falling dollar benefits people who owe, because you pay back in less valuable dollars. A loan with variable interest isn't as favorable but most have caps so the debtor will still come out ahead. So the destruction of the dollar won't cause this. Only if the dollar grew very strong would this angle make sense as you would be paying back your loan in dollars that were more valuable and much harder to come by.

Looks to be major deflation coming or a scenario where the economy breaks down so badly there is no income to earn and pay back debts.

Then again this guy has been a long term Senator, looking over the long term demise of our country. Maybe he is just an idiot and mistakingly believes that major inflation, dollar weaking will be bad for debtors. This would help explain why all our policies make no sense whatsoever.

I think that all depends on the amount, and realisticly how long it would take for some one to pay it back.

Also I don't see why every one is jumping at the whole ''he needs to back up that claim''. I don't think it's a ''claim'' he was giving general advice, that he thought some one could make use of.

Again, remember, not all loans are same, not all are hard to pay off, neither are they large sums. I think he meant any thing that will take over 4 years to pay, would lead you to nothing by the 5th.

So basically, don't get a large loan that will take you years to pay, as logicality goes, it would send you broke. That's what he was ''claiming''.

reply to post by sligtlyskeptical


What you said makes sense but it makes the senator make even less sense. I am starting to think that Kayla is right and either this guy misspoke or he simply doesnt like loans and sees immediate collapse in our future.

reply to post by sligtlyskeptical

That's a good point and you are exactly right... hyperinflation would cause the opposite of what I inferred. Maybe he is seeing hyper-deflation coming? That makes perfect sense: if anyone took out a loan in an inflated economy, then tried to pay it back in a deflated economy, it would be practically impossible.

Now I am wondering what could cause deflation on such a rapid scale. Any suggestions?

ETA: I just thought about something while typing: during the Great Depression, we experienced hyperinflation followed by hyperdeflation. Now I am getting worried! We are already seeing pretty high inflation.

TheRedneck

reply to post by TheRedneck


Anyone can see that the current global financial system cannot be propped up for ever. Sometime soon something is going to give.

I suspect as that time gets closer we will hear more little snippets of information like this from those in the know. How could you lie straight in bed knowing that most people you know could lose everything? It will come out through guilt.

Thanks for the heads up TRN! If true we had better hold on. It may be a rough ride!

reply to post by TheRedneck


If we were going to see hyper-deflation wouldnt that have to mean that other world economies would have to inflate? That seems possible.

A pure guess of a possible scenario here,

But if a currency devalues a certain amount, the creditors will start to favour taking assests, sort of like turning every different type of loan into a new morgage if you will. So say you get a regular loan, of say £10,000 with a 5 year payment plan, fixed rate, with adverage interest rates the banks will be loosing out in the long run. Lets say for an example that the repayment, complete with interest, will add up to £12,500, if a currency devalues over a certain threshold (so to speak) the bank would of lost out on their profit, or even make a loss, making them reluctent to lend to people, which causes a problem, because lending money is how banks make alot of their money.

It could be more than likely that you will have to place down some form of valuble assest in order to get a loan, whether it be a car, morgage, or a collective pile of valuble assest that equil close or more than the loan you're asking to get. Like a deposit of sorts, to protect the banks from hyper inflation and devaluation. You will be ordered to pay back the loan financialy, until the banks decide that they are now loosing money on your repayments, thus then take the 'deposit', either as a whole or a percentage.

Now we have a bit of a problem here, what if someone is paying of their morgage and need a loan? They can't put their house on there, because they don't technicaly own the house, the bank does until the morgage is payed off, so they can't put their house down, resulting in the borrower having to put down every single asset that they own down, after a car there arn't many more single assests that are generaly owned by people that could be valued at more than £10,000 Thus literaly everything will have to be put down as a deposit, maybe to the point of even pensions, investments, savings, etc etc. Anything that could be owned by the borrower would belong to the creditor.

So say i do this, and im sitting im my home with my new £10,000 loan. The sofa i sit on when i get back home, is now the banks, the tv is the banks, the fridge, the flooring, my clothes, my computer, a family relic that has been past down generation after generation, the mirror in the bathroom, etc etc. And if it does get to the point where the currency is devalued so much, to the point of near worthlessness, the banks will just take the assests, as they will be the only thing left of value.

Sorry about the spelling errors, i know it can get to some people,lol, but that seems to be one logical way of this happening, where people will literaly loose everything.

reply to post by Trolloks


In your scenario it would seem people who already owe may be slightly protected (unless their debt is secured). If you already have unsecured debt then they can't take your assets as long as you can make your payments.

New borrowing in such a financial climate would be akin to scuicide.

"Anyone who borrows money for at least five years will lose everything they have."

what does this even mean? Without context it doesn't rise to the level of coherence. On its face value, the fiat currency world is crap, this isn't an insider secret, nor is it news. 5 years? The connection to "borrowing" as losing everything one has isn't clear - losing one's savings or property owned outright might be a scoop, but suggesting the value of the debt will be worse then it is isn't insight.

Considering nearly all government folks know absolutely NOTHING about how fiat currency works the words of these folks means less then nothing, especially a sentence or two without full explanation of the context.

Folks must keep in mind that the average U.S. Senator has the intelligence of a bag of rocks. And this shows by their actions. All of them lately.

While the OP is awesome for sharing this with us, keep in mind what we have for U.S. Senators...

...I wouldnt trust one single word coming from ANY of their rotten mouths.

Thanks for this information TheRedneck. He's saying outright what's on a lot of people's minds. After the global crisis in '07 the MSM has been trying to sell us a story that's better than what's going on.

I think a lot of people know and feel it in their gut, that even though our current "better period" after the recession is just a small uphill climb before everything comes tumbling down. The current global financial system has become too big to carry its own weight, won't be long now...

I also made sure in the past few years that I'm debt free. It was relatively easy, I'm not American, you guys have a much harder job at accomplishing this b/c the use of a credit card is considered normal in the USA, where I'm from almost everyone has a debit card. I can't speak for homeowners though in my country though.

Originally posted by TheRedneck
reply to post by sligtlyskeptical

That's a good point and you are exactly right... hyperinflation would cause the opposite of what I inferred. Maybe he is seeing hyper-deflation coming? That makes perfect sense: if anyone took out a loan in an inflated economy, then tried to pay it back in a deflated economy, it would be practically impossible.

Now I am wondering what could cause deflation on such a rapid scale. Any suggestions?

ETA: I just thought about something while typing: during the Great Depression, we experienced hyperinflation followed by hyperdeflation. Now I am getting worried! We are already seeing pretty high inflation.

TheRedneck

The reality we face is that ever dollar we print adds a dollar of debt plus interest. Thus by creating new dollars with debt, we actually shrink the wealth that is available to the economy. When you look at what has transpired throughout the years, all the available wealth is mostly held in just a few ten thousand hands. This means that for everyone else there is no real wealth.

Even those who have had stable income over the past few years find that the money they earn buys them less items as a whole. In traditional economics that means prices should come down to stimulate demand. When the government debt machine gets shut down, and they will at some point, prices won't be able to continue to run against this economic theory and we should see a big decrease in prices, i.e. hyperdeflation.

Ultimately we need go to a non-debt money system, where the Treasury simply prints the money the country needs to operate in addition to a small income tax. As a society we can't accumulate dollars for retirement or have a sound growing economy without a growing money suppply. Done right, it won't be inflationary. In fact, since most have no wealth at all, they would have a hard time printing enough to catch up for the current shortfalls.

reply to post by sligtlyskeptical

I have said for some time that we are in a very unique economic situation as of late. We have seen the middle class split into two segments: those who have jobs and those who do not and cannot find any. In a normal economic downturn, people in general have less money to spend and prices are forced down because very few can afford to pay them... for businesses, the decision is to let products sit on the shelves or to drop prices to affordable levels.

Today, enough people have jobs that this is not happening. Those who do have jobs are doing wonderfully; almost every job I hear of is on overtime. But the same places are not hiring new employees, primarily because they are scared of taking on new overhead as they are uncertain of what the future will bring. So there is one group who are hurting tremendously, while another group is doing well enough to keep prices from dropping. And the businesses are so deep in dcebt themselves that they cannot drop prices very far without closing their doors anyway. Gone are the days when a company made money for payroll and paid it out to the workers directly; now banks give loans for payroll and the income is used to pay back the loans.

Not to mention, the minimum wage means a business has extreme difficulty adjusting to dropping prices.

What this is doing is bringing massive new debt into the government as more and more are on government assistance and have exhausted savings. It only takes one small bump in the economic system to cause a correction; these corrections are usually small and short-lived as the rest of the economy takes the strain. But we are approaching a tipping point where one large layoff, one bad quarter of sales, can cause more workers to be laid off, which means less people supporting the economy and more people on government doles. At some point, the system will be unable to sustain itself and prices will be forced to plummet overnight. As they do, businesses will be unable to make enough profit to meet payroll and more workers will find themselves without an income, and the whole thing will spiral down.

It happened in 1929, when the "roaring 20s" came to a screeching halt, but back then it happened quickly. The result was a massive correction that caused a worldwide Great Depression. The difference between then and now is that we have artificially tried to halt the decline by propping it up with Federal debt. That Federal debt is not a solution, but a further burden on the economy. We essentially held up a falling avalanche with splintered 2x4s and piled another mountain of snow on top in the process. When it finally breaks, it will be catastrophic.

Thank you again for pointing out my misinterpretation of the economic condition. I am still trying to figure out what this Senator knows, and I guess my mind was preoccupied.

TheRedneck

Originally posted by Pelvi
reply to post by jakeistheone

 

It may mean that our currency will be highly devalued, and that 1000 would turn to say 15000. Making 15000 with no job because there are no jobs in this situation would be impossible, so therefore everything would be repossessed in order to get the money back.

just a guess btw

This is what my brain went to as well. Either devalued or replaced altogether, leaving those who owe a debt in US dollars at the mercy of whatever new currency is installed.

"Anyone who borrows money for at least five years will lose everything they have."

I see this can be interpreted several ways; but, the way that makes most sense to me is ...

Anybody borrowing money now or within the next five years ... will lose everything.

To me, this hints at an economic crisis in 2017 with virtually complete devaluation of the USD (bankruptcy USA).

This is because the Dollar will become worthless... we are going to go through a currency exchange.

The Federal Reserves contract to print americas money is up at the end of the year... the process has been started and there is no stopping it.

Originally posted by underduck

Originally posted by TheRedneck
"Anyone who borrows money for at least five years will lose everything they have."

I am lost on this as well. If the value of the dollar goes way down anyone in debt now is screwed already so ... Im boned. Sounds to me like the senator made an awkward comment and may have misspoke slightly. Unless he is just saying that everything financially is going down the toilet so minimize risk and dont go "further" into debt.

edit on 27-4-2012 by underduck because: (no reason given)

Just to interject with some financial facts to the issue....
If the dollar devalues 1500% (as was stated in another post),
as long as one has a job, that actually reduces the "real" money one owes.
That is the crux of quantitative easing. (I am financially credentialed)

An oversimplified example: say one owes 100K on a home loan. Then let's pretend that inflation
increases at 100% for the year, where $2 now = $1 a year ago. And let's say that your
jobs wages also increase at the rate of inflation (they usually lag behind but they do increase with inflation in a real world scenario). In this oversimplified scenario, you now actually owe only 50% of what you owed one year ago in terms of "real" value. Why? Because when you have a loan, at the very least, your principle is pegged at the value of the dollar when you first receive the loan. This is why banks LOVE quantitative easing. They all owe loaned money between each other and quantitative easing nets them profit. But, this also is a backdoor economic hedge for the average Joe. So, contrary to what the Senator said - assuming one is not put out of work - taking out loans can indeed be a hedge against rapidly inflationary economies.

So that scenario, and what the senator says makes absolutely no sense. Furthermore, if everyone loses their jobs and everyone defaults, it will be physically impossible to remove everyone from their homes. That sort of scenario would result in a total economic default, and you would end up with everyone owning what they have without the associated debt - and a total restart of both economy and currency.

Not to mention our boys and girls in the military will have the same hyperinflation, and so will their families and families families.
Who's going to enforce collections? The sheriff's offices? Their dough is no good either. Local Cops? Nope.

How about we create a new currency and we all start from scratch... Hmmmmm Who decides the value?

Gold, Silver,Plutonium Reserves? Is THAT why we want Afganistan so bad?
www.scientificamerican.com...
Lithium?

I think Bilderberg should include us commoners in the value and choice of currency name at the next summit. How about New Gobal Currency( NGC's sound good?) and every adjust's and shuts up?
'No, we don't take peso's,dollars,euros" just NGC's. Here's your rate of exchange.

Wanna bet Law enforocment on any level gets paid in new currency first? The NGC dough?

That's what I would do... Then you have a loyal army. Just sayin.

I'm not sure if this has anything to do with it. I was reading the book "Aftershock" They already made dire predictions that actually happened. What they are saying for right now is that we are in a huge bubble crisis. It is six bubbles, and as one starts to collapse the rest will.

Real Estate was the first bubble that already started to collapse. It is not done yet. The others are the stock market, private debt, discretionary spending, and then the two biggest that were on the bottom were dollar bubble and government debt bubble. Once those two burst, hold on to your shirts.

I haven't read through all of it as of yet. It seems there was an earlier version of the book where they put in a doomsday chapter that they didn't put in the one I'm reading. He said the readers called it the Dr. Zhivago chapter. I don't know Dr. Zhivago, but it sounded dire. They also stated they believed that changes will be made by the government before hyperinflation hits like it did in Germany.They are optimistic about that.

Their advice so far is not to go any further into debt. If you have an adjustable rate loan, see if you can get it financed with a fixed rate especially a mortgage. Try to pay off as many credit cards and loans that have fixed rates. Get out of the stock and bond market all together. Get out of real estate unless you have a buyer ready as soon as you pick up a house.

They were talking about the dollar being devalued, so therefore the prices of every thing is going to go up. They mentioned that if you can hold on to your money, that after the bursts happen is that real estate is going to be extremely cheap afterwards.

They also predicted the price of gold is going to sky rocket, but will also create an unsustainable gold bubble. You need to buy it before the government debt bubble and the dollar bubble starts to burst. When (I'm going to call it the gold bubble) gold bubble bursts, they are predicting gold will be down under $100. I'm not sure when the government debt and dollar will burst or even if it already started to happen.

They gave a time frame between 2013 and 2015 when things really start to happen. That can be delayed by new government policies, and the people who control the money.

Edit to add what I just read from the book: "This advice is given assuming all the bubbles, including government debt and the dollar bubbles, have fully popped completely. This won't happen for awhile. We may get some popping of the discretionary spending bubble, for example, but the pumping up of the government debt and dollar bubbles could temporarily pump up the discretionary spending bubble again - at least for awhile.

That is why we always say: Don't Panic! The final popping of these bubbles will take some time."
End of page 218 chapter the beginning of chapter 8 Aftershock jobs and businesses. I skipped ahead.
End of Edit.

We still have some time to get ourselves in a better financial position if all this does happen.

There is more in the book, so you would have to get a copy to find out what else is written in it. It is called "Aftershock" Next Global Financial Meltdown revised and updated by David Wiedemer, PhD. Robert Wiedemer and Cindy Spitzer. Second Edition copywrited 2011.

If anyone read Aftershock, maybe they can fill us in a little more. If anyone read the first edition, could you please let me know what was in the chapter that describes society after the meltdown.

I wouldn't put it past the government not to tell the public any of this to prevent a panic whether it was an investor panic or a riot on the streets panic.