The Consumer Credit Game Is OVER

The Consumer Credit Game Is OVER

market-ticker.org

Let me be crystal-clear so nobody can say later they weren't warned: If any part of your economic thesis going forward requires that consumer borrowing expand in order to foster economic growth you are wrong and everything you believe that depends on that is also wrong. Further, any belief that per-capita income has not SHRUNK from the flat-lined 2006-2008 levels in 2009 is also wrong, although the Census numbers for 2009 will not be out until September 2010.

(visit the link for the full news article)

Found this on Market Ticker. I will attach the graph below.
This morning the US Census released its update with per-capita income numbers for 2008 being released.

The chart is one more example of the path of unsustainable debt to fuel consumer spending and the continued bailouts of corporations by the fed and the US taxpayer. Last night I believe President Obama appeared to be announcing another big windfall for the health insurance lobby which will do nothing to contain costs. These guys just don't get it...no matter how hard they blow they cannot reinflate the bubble. It's over.


There is no way out of the box via this method; we are in fact headed for a sovereign credit, monetary system and thus GOVERNMENT failure if we don't stop! WE MUST accept a contraction to sustainable levels of economic activity and STOP trying to substitute for consumer demand with government borrowing or we WILL witness the collapse of our governing funding model when those who loan the government money realize that the US consumer is INCAPABLE of resuming their former credit-expansionist way of life.

market-ticker.org
(visit the link for the full news article)

* Chart note: The Federal Debt and Consumer credit numbers are updated as of 9/10/09; all other figures are as of 12/2008 as 2009 numbers are not yet available in comparable formats.

[atsimg]http://files.abovetopsecret.com/images/member/8bddf1d06e2f.png[/atsimg]

Sorry if this is off topic
No credit system can ever sustain itself without "debt forgiveness"
My Example is simple but I hope you will see the light.
Let's say I am the only bank and I create (print) some money for all to use. So I print 100,000 units. Call them by whatever name you wish-dollars, pounds, francs, rubles, euros, ameros, etc. It doesn't matter. Now, in my country there are only 10 people. I loan each person 10,000 units at 10% interest. All loans are due in 1 year. OK, so now on paper I have 110,000 units but there only exists 100,000 units. Where do I get the 10,000 units from? Since they don't exist there is no way I can.
This simplified example is what has happened to the worlds' financial system and there is no way out except for debt forgiveness.

reply to post by Muundoggie


Not quite; you can always print more money and pay it to the people who work for you as compensation. The government pays their workers and in turn inflates the currency.

Originally posted by Muundoggie
Sorry if this is off topic
No credit system can ever sustain itself without "debt forgiveness"
My Example is simple but I hope you will see the light.
Let's say I am the only bank and I create (print) some money for all to use. So I print 100,000 units. Call them by whatever name you wish-dollars, pounds, francs, rubles, euros, ameros, etc. It doesn't matter. Now, in my country there are only 10 people. I loan each person 10,000 units at 10% interest. All loans are due in 1 year. OK, so now on paper I have 110,000 units but there only exists 100,000 units. Where do I get the 10,000 units from? Since they don't exist there is no way I can.
This simplified example is what has happened to the worlds' financial system and there is no way out except for debt forgiveness.

Exactly, hence Jubilee in Judaism, and the practice of paying debts in the other world (after death) which existed in the Celtic cultures

Originally posted by Thaumaturgus
reply to post by Muundoggie

 

Not quite; you can always print more money and pay it to the people who work for you as compensation. The government pays their workers and in turn inflates the currency.

Well, that's exactly the form of debt forgiveness to the collective whole through certain main interfaces of capital (not to individuals) which is going on... only it's being attempted through devaluation or "inflation".

Originally posted by Muundoggie
Sorry if this is off topic
No credit system can ever sustain itself without "debt forgiveness"
My Example is simple but I hope you will see the light.
Let's say I am the only bank and I create (print) some money for all to use. So I print 100,000 units. Call them by whatever name you wish-dollars, pounds, francs, rubles, euros, ameros, etc. It doesn't matter. Now, in my country there are only 10 people. I loan each person 10,000 units at 10% interest. All loans are due in 1 year. OK, so now on paper I have 110,000 units but there only exists 100,000 units. Where do I get the 10,000 units from? Since they don't exist there is no way I can.
This simplified example is what has happened to the worlds' financial system and there is no way out except for debt forgiveness.

Of course there is another way out. The banks can simply print the extra 10,000 units and distribute it interest free. That's what the bailouts are about.

reply to post by Make Speed Limit 45


You're right but I wanted to add one little thing. The bailouts were a special case of printing money. Usually that's not the way it's designed to work.

How do the ten people pay back the 10,000 that doesn't exist?

Well the idea is that eventually an 11th person will come to the bank to borrow money too and that the first 10 people will get their hands on some of that money somehow to pay back their loans.

But then you have another loan that needs payed back so you need a 12th person so 11 can pay back his loan and a 13th person so 12 can pay off theirs and so on forever. You have to constantly have more people lining up to borrow new money to pay back old loans. It's almost like a pyramid scheme.

This also causes inflation. Hence why a loaf of bread used to be 50 times cheaper than it is today. The bread is actually the same price. It's just actual money is worth 50 times less than it used to be.

Part of the credit crisis was, they couldn't find anymore people to line up to borrow enough money to pay back the old loans and buy new real estate with it because when the real estate market popped nobody wanted to buy real estate anymore.

This means new people weren't coming along to buy the houses so the people that were trying to sell them never got their hands on the "new" money they needed to pay off the old loans. It was never created because nobody wanted to borrow it.

How much money they can print depends on how much demand there is for it. If there isn't any demand for new money they can't print it. So, how much demand there is for money is what determines how much our money is worth.

Hence the solution, don't bother waiting for someone to come and borrow the money so we can print it. Just print it and pay off some old loans with it.

[edit on 12-9-2009 by tinfoilman]