Our meltdown can also be understood. This is must see. All hubbers need to take the time to watch this video:
http://video.google.com/videoplay?docid … 0256183936
I really hope that you get a chance to watch this. It is not a little 3 minute video but is a complete history of money and government through the ages up until just before the current meltdown with leverage. Only the fed knows if we are headed to inflation or deflation and they have robbed us of our wealth at fort knox. They have put America in such debt that it boggles the mind and it is increasing massively. Who knows what they have planned for us next.
Yeah that's definitely a video everyone should watch bgamall.
Get out of debt.
Consider foreign currency funds.
Educate your friends.
Beware of calls to return to the gold standard.
Beware of calls for a world currency.
That video is flawed. The only monetary system that is resistant to manipulation is the gold standard. Government don't like it because they can't inflate and spend like they can with a fiat currency. Why do you think the price of gold has almost quintupled over the last decade. Interestingly enough, it's gone up in price as the deficits of the country have increased and the interest rates have gone down. Why do you think that is?
The video says to beware of calls to return to the gold standard because never before has so much gold been so concentrated outside of American hands and never before has so much gold been in the hands of international governmental bodies. The concern according to the video is that it might lead to a world currency.
Um we had a worldwide gold currency at one time. It was called the gold standard. In fact until modern times all transactions were made in gold. Ever wonder why?
Except we had bank failures and boom and bust times on the gold standard too--very serious ones. That's how the idea of a central bank started to get to be an issue in the first place--because the banking system was so unstable.
Banks have a terrible history as institutions, not just in America, but worldwide, regardless of whether fiat or specie currency is the standard. The biggest reason for this IMO is because banks have to lend money to make money, so there's always this push for more and more leverage. Fractional reserve lending is the main problem, not currency. You can have abuse and manipulation no matter what backs your currency.
The history of banking is the history of abuse, basically. It's ok for awhile, then the banks get out control, crash, then it all starts up again.
Also, fiat currency isn't backed by nothing, it's backed by the rep of the nation issuing it. We are in trouble now in large measure because of oil. You could make a good case that for the past 30 years we've been on the oil standard, and now we have limited access and everyone wants out of USD because of that.
and... (I know I'm talking to myself at this point)...The tendency right now is to look for scapegoats. Just keep in mind that if you demonize the Fed or bankers or fiat money to whatever, you create a climate where people start thinking it's a good time to start killing Jews. It's true. Already we've got the wackos crawling out of the woodwork with live ammo, so I say let's avoid the conspiracy theories. There are LOTS of reasons we are in financial crisis now. It's not simple and it's not all the Fed's fault. A good book on it, if anyone is interested, is Kevin Phillip's last book, 'Bad Money.' It's a quick read but he backs up with statistics and research three separate forces that came together all at once to create this--and an international cabal of bankers is not one of those factors--although insane leverage combined with deregulation, rampant greed, and almost zero oversight is one of the factors.
Actually Pam, reserve banking and fiat money have at different times been responsible for banks failure. The reason bankers wanted a central bank was so that they wouldn't go bust when and if they had a run on the bank.
Fractional reserve banking is inherently misleading. You think you're putting your money someplace where it will be safe. Instead of holding on to it like a money warehouse, the banker lends it out in the form of loans. Now I personally don't mind this, but I'd like a little input about what you're doing with MY money. If the bank makes a lot of good loans, they live off the difference and can afford to pay off their sight deposits. When they make a lot of bad decisions or are forced to lend to people who cannot pay it back, well then you have a problem.
The Lakota tribe is experimenting with no reserve banking. That is they are starting a bank that will not use your money to originate loans. They do give you the option to put some money in a general fund from which they do originate loans, so you get interest on that, but you're not forced to and you can keep as much of your money in your account as you want to preserve your wealth. That's how banks should be run. Not we take your money and lend it out without your consent and if we lose it, oh well.
And I've never advocated any violence against the Jews. In fact I defend the right of Israel to exist. But I can't be responsible for some ignoramus misconstruing what I say and using that for justification for heinous acts. People who hate will use any excuse they find to act on that hate. There's plenty of scholarship on the problems of the Federal Reserve and the inherent instability of fiat money.
Check out http://www.mises.org under their literature section. You'll find volumes about fiat money, business cycles and why we're in the mess we are today. "Empire of Debt" and "Mobs, Markets and Messiahs" written by Bill Bonner explain things as well. IOUSA is a documentary that explains the mess we're in today and why. Education and knowledge are the only ways we can fight back against those consumed by hate and ignorance.
Yeah here's a video with Kevin Phillip speaking about his book Bad Money. He knew it was coming too.
http://video.google.com/videoplay?docid … 5640961960
"Check out http://www.mises.org under their literature section. You'll find volumes about fiat money, business cycles and why we're in the mess we are today."
I'm familiar with that site. It's not exactly politically neutral IMO.
I didn't mean to accuse anyone of advocating violence against Jews, I was just pointing out that conspiracy theories fuel fear and move unstable persons toward that kind of violence, so, even though we do have free speech here and definitely no one is responsible for another's insane acts, we should avoid incendiary language when we can.
That's what I think anyway.
And not just because conspiracy theories can incite violence, but because they obscure the real issues and distort information.
I'd like to see banks reduced to something akin to public utilities, and keep investment banking separate and limit leverage drastically. It's time to question whether this level of private debt (as in debt held by individual persons like you and me) is really necessary or healthy.
Why would it be awful if it was much, much harder to borrow money?
It would change things, it would cool off the economy, but it would also ultimately stabilize it. That's my view.
Are you kidding, Pam? You do realize that they neither endorse a candidate for office nor do they contribute financial support to any candidate for office. About the closest they come to supporting a politician is hosing some of Ron Paul's books because he advocates them not the other way around.
Do you know of any politically neutral sites? If so, point away and I will follow.
It's interesting but I found out about them from a friend who sent me one of their daily articles against the war in Iraq. Out of curiosity I perused the site and was astounded by what I found. To that point I'd been a student of history for about twelve years, gone to business school for four years, and been a student of philosophy for about three years at that point. I'd never run across any of these authors, books or viewpoints ever. And I'd been a student at three universities. Much of what is written on that site coincides with my researches into history and philosophy. I wouldn't say I was a neocon, but I was a sucker for the crap they were spewing about the need for an American empire on the model for the Roman one. Mises.org cured me of that for all time.
The problem with making it hard to borrow money, Pam, is that businesses, especially start ups, need a lot of it. That's a difficulty I'm running into now. Thank God for the Internet otherwise I'd go broke testing my marketing plan. A free people need a free money, which is exactly what we don't have right now.
Have you checked out any of the microlending sites? That's a cool trend. Maybe you could get some help there from a person. You definitely are a smart guy and I've no doubt your business plan kicks ass.
No offense intended on the economics site. I've poked around when you sent me there before. You're right, especially on a topic like that, there's no such thing as a value-neutral site.
Value neutral and politically neutral are not the same thing. Methinks that you're backpedaling a bit. One of the things Mises' Human Action teaches is that people make decisions based on values. So you never really can have a value neutral perspective. Additionally he makes the point that everyone's system of values is different and that explains why people act in different ways.
As for microlending, most of those are oriented towards Third World nations. It's just politically correct to give to those nations, I guess. Actually a revolving line of credit is ideal for a business because those allow you the flexibility to borrow only when you need, so if you do make a mistake, it's not fatal to the business. Microlenders generally don't offer lines of credit.
The biggest problem we have is that people don't have any sense of fiscal responsibility, or moral responsibility anymore. Whatever else Ulysses S. Grant was, he was an honorable sort who paid off his debts. So much so that the outbreak of the War found him destitute on a farm in Missouri. William Sherman was the same, he went so far as to pay back monies people invested with him on a deal that went sour. He was under no obligation to do so, except the obligation he placed on himself. Do you see any politician, CEO, or anyone else like that doing the same in this day and age?
Values are incredibly political. I think it's naive to assume otherwise. You've referred me to that site before as if it was the definitive finance and economics source on the web and I don't think it is, that's all. I think its heavily slanted to your current political views. I do read lots of different authors and lots of perspectives on finance, and of course pretty much ALL of this stuff is both politically slanted and based on a specific set of values whether those values are explicit or implied.
I know you love history--that shows in your posts. But history is also slanted. The old saying of course is that the victors get to write it. But also, on a more mundane level, each author brings a set of suppositions and personal judgments to the writing of history. So constantly bringing up history as if there is one historical set of facts and one authoritative way of interpreting those facts, is a misunderstanding of what history is.
In general, I find that Libertarians are fond of absolute statements and I am not fond of such statements, which is why I end up in these long exchanges from time to time. While some people find authoritative statements reassuring and orderly, I find them constrictive and often distorting. Look, life is messy. So is history. And so is finance. So I'm not backpedaling, I'm just not accepting the site you really really like as the last word, that's all. That's not the end of the world and I'm sure I'm not the first person to give you that.
Honestly though, back to microfinance--have you tried? Or are you just assuming it's only for third world inhabitants? There are lots of microfinance sites. Not all are geared to Africa and so on.
Yes, I've tried. Most microfinance sites that lend to people in the First World are really covers for banks. They set the bar kind of high and really offer terms little different than what you would find if you actually went to a bank and applied there.
True victors may write the first histories, but their stories rarely stand the test of time. Ramses II, for example, seemed like the epitome of Egyptian Pharaohs and for a time enjoyed that acknowledgment in the ancient world. Modern scholarship has cast doubt on some of his accomplishments and has shown he had a tendency to chisel the names of previous Pharaohs off monuments and insert his own.
Studying history tends to allow one to take a longer view of things. Sure history is messy and divisive and bloody and violent. It's also uplifting, inspiring and shows us at our best. A true scholar of history finds appreciation and wisdom in the latter and warnings from the past in the former. Some things are not relative. I can understand your hesitation to accept absolutes, but there are a few things which are. Standing the test of time can point us in the direction of those absolutes.
Have you read Howard Zinn? American history is quite distorted and has evolved into a mythology that isn't very strongly related to actual facts. But the U.S. is a young country so maybe you are right. Maybe the long view will be clearer. I guess we'll find out.
I'm not bashing the study of history; in fact, quite the opposite. I'm just saying there's something in your tone and in the way you refer me to these sources that conveys a certainty about the world that I don't share with you and don't want to share with you because I think it distorts reality and is itself political. But then relativism is political too, so there's not escape for the cynical. Not really.
It's funny but the study of history really does change you. I used to be, not a neocon, but pretty close. Then I began questioning my assumptions about the American Empire. When I contrasted it with past empires like Rome, some things became clear. An American Empire would go the way of the British, Roman, Egyptian, Persian empires. So I reexamined what an empire really was.
That lead me into economics and philosophy, which neatly tied back into history. One of the first things I noticed was that people have been arguing the same things almost since the dawn of time. Once you recognize the patterns of these arguments, history takes on a whole new meaning, it's not just names, places and dates, but a giant laboratory where the actions and reactions of people, places and beliefs have played out time and time again.
By recognizing those arguments and analyzing how they play out, one can get a feel for what environments work and which don't. You'll note, I hope, that I only endorse Mises.org and not the Cato Institute, for example. They do argue for some of the same things, but Cato takes partisan sides and is somewhat inconsistent with all the tenets of a free market. Sometimes one feels like the one eyed man in the kingdom of the blind, but being forced to explain myself and my reasoning does two things. One, it makes me a better communicator and two it forces me to be humble, which is an accomplishment in and of itself. Pride has always been a weakness of mine, as you've no doubt noticed.
Pam and LDT - just sat with a coffee and a cigarette, and really enjoyed your discussion. That is what debate is all about
Agree, Sufi. Looking forward to your history of debate hub.
And I learned so much too. Btw Lita I hope you also will produce that "debate" hub you were planning to write earlier. Just finished our breakfast and we will be heading out to check out some houses here.
Sure - it is actually half finished. It is not so much about the history as about the etiquette behind debate in modern Greece. Even my friend in the next village, who is practically illiterate, would tear apart many of the so-called debaters on here.
EDIT - Enjoy house-hunting, CW
Thanks Sufi. We are still in double minds whether to even buy but anyway one of our family friends recently bought and the builder is having an open house in the same lot. Btw can't wait to read your educational hub. Bye take care. Have a great weekend.
You too - sounds like life is interesting for you, at the moment!
Glad you enjoyed it Sufi, the same goes to everyone else who is reading. I can't wait for you hub on the etiquette of debate. On thing that seems sorely lacking in debate these days is common courtesy. Will you also be looking at fallacies when debating?
I think that Lita is doing fallacies - I am doing overall etiquette. At the end of the day, you , Misha and I had some cracking debates, but it was all in an atmosphere of mutual respect. That is what debate is about!
CW - Listen to LDT and Misha! Mark Knowles sums it up well - three times your salary is the most that you should be paying
EDIT: LDT's history hub is well worth a read.
I agree Misha, we still haven't seen the Alt-A adjustable mortgages reset yet. All the work the government did to "save" the banks is about to be destroyed. That's why the banks aren't using the bailout money to originate loans, they want to hold on to the cash so when the values of those loans have to be written off, they'll still be solvent. I'm not too hopeful that will work. Expect housing prices to drop further. I'd actually wait until the nest Presidential election as the Alt-A resets are due to reset from this fall to sometime in 2011.
For those of you that have been following, I've updated my hub on early modern history, you can get a look at it here: http://hubpages.com/hub/A-Brief-History … odern-Era, although I may have to change the name to a not so brief history of the early modern era.
CW, as an option, if you absolutely positively have to get a house right now, find a buyer that will finance it as a rent with an option to buy. If you set the option to expire in five years, most of the housing nonsense (hopefully) will have been liquidated and the market returned to more or less normal.
In the beginning the home seller might set a monthly rate based on the current value of the home and when you exercise your option to buy the home might not be worth as much as all that. What that means is that your down payment will be a bigger percentage of the value of the home in five years so you'll save money over the life of the mortgage in interest payments.
If, however, the house goes up in price then you will have accrued some equity in the home above and beyond what your option agreement has put down as a down payment. So really you should be covered if the market goes up or down over the next few years. Good luck.
LDT- Thanks for the wonderful advice. I am not sure if we are pre approved for "rent to buy". But will ask my husband if he knows any more information about it. Any case our lease is due in August and if we don't buy we will try to rent a bigger place (my in laws are planning to come).
Misha- We are getting an excellent interest rate(4.75) and more ever our close family friends will be our neighbors hence that motivated us to take an active interest. But still not sure though.
Sufi- That is an excellent advice. Actually the ball park we were planning to go for works out to twice our combined annual gross income. Now will go and read LDT's history hub (thanks for the invite).
Thanks everyone for the concern and excellent advice. No wonder I miss you all so much(for the love and concern shown towards me).
The lease to buy agreement is not one between a bank and a home buyer. It's an an agreement with a home seller and a prospective home buyer. It's a bit like a landlord/tenant relationship. It can be a great way for people starting out to get a down payment ready and the landlord gets some income from the rental property until the tenant exercises the option. If they tenant doesn't exercise the option, the landlord then has the option to sell the house, rent it out or find another person who wants to lease with an option to buy.
Barring that, if you have to buy a home outright, make sure you can get it for about 70% of market value. That might be enough to cover you if housing prices take another nosedive. The last thing you want to be is underwater in regards to your mortgage. If you can find a motivated buyer that will sell to you at under market price, try to put as much of a down payment as possible, that will further insure you against being underwater regarding your loan and probably give you a better rate as you're less of a risk to the bank.
A final tip. If you do buy a house, try to get the lender to accept two payments from you a month. You'll make the equivalent of an extra month's payment each year, pay your mortgage off several years early and save a God awful amount of money in interest payments.
Anytime CW, hope you find something you like.
For those of you who want to really understand why the bubble happened, Peter Schiff gave a talk about it, you can find a transcript here: http://www.mises.org/story/3493. This tells the story of the bubble and it's deflation rather better than the video at the top of this topic. It underscores what read economic thought is about, not charts, derivatives and numbers, but people, specifically people and their actions.
Thanks for the link. Btw there is full stop/dot at the end that needs to be removed to view the link. You seem to be very knowledgeable about the housing scenario. We are in double minds (lower prices, low interest rates and Obama's first time home buyer credit seem like a good deal). I am really glad that I joined HP where I get to interact with so many experts like you in different fields.
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