Just one small … Just one small error, the seller of the first house gets 920K after paying off his 80K loan after selling the house for 1M. He does NOT get his initial 20K down payment back. That would be absurd.
but in the modern … but in the modern times…….money creation depends on the debt….as more the loans are more money banks create….look for money as debt videos…….
When you tell me these things some of my old collegues’ stories comes to mind. – How they kept getting richer and richer, took out new loans and improved their houses etc. Hahaha, if I knew what you say now, I’d sure be preaching, haha.
Thank you for your insights, this is extremely interesting.
What bothers me is … What bothers me is the printing of money with no true value. The fact is this has been going on since before Kennedy. The world bank can completely dissolve our nation and others by us buying into the ideology that we can lean on false currency which is all determined World Bank standards. This makes a nation of slaves eating from the hand of some shadowy figure behind a desk somewhere. But then again everyone is afraid because no one knows whatelse 2 do.
Home improvement is … Home improvement is real investment. It creates an asset (the pretty rec room and kitchen) that is expected to provide value for someone in the future. The problem is that it’s even more grossly overvalued than the house. So they overpay for it. They might expend $200k of factors of production to produce improvements that are really only worth $20k as a stream of imputed revenue.
Some dodgy … Some dodgy arithmetic here. So we’re ignoring the interest payments, but the seller of the house on the left ends up buying a $100K house for $60K. He should be moving to Costa Rica with only $900K. You’ve knocked his $20K equity off the cost of the house at the start – that makes sense. Then you’ve taken $20K off the mortgage before settling it AND then given him the 20$ back as well. He’s $40K up on the deal.
No. Those with … No. Those with capital can increase their wealth using the labor of others. This increases the burden on the poor, while rewarding the wealthy simply for being rich.
Socialism guarantees a minimum standard of living. Because the poor spend all their income there is little net cost, yet it stabilises the economy as then there are more consumers spending.
Conservatism aims to erode this mechanism for short term gain. Resulting in a crash when the base of the pyramid can not pass up more wealth.
basically money is … basically money is just an idea. the market value of a house at any particular point in time is a sentiment for that particular asset. sentiments vary as people look to other outside indicators ie: stock market, geopolitical issues, environmental issues even, etc…yes there is no ‘wealth’ now, but time was the main factor. the wealth was not ‘illusionary’, rather, that’s not the best word for it….since if you sold at the right time, wealth would be present.
Capitalism is about … Capitalism is about each person wanting to keep his own money. Let’s call that greed, to concede your point. Socialism is about wanting to take someone else’s money. That too is greed, but it has another element: theft. We all are greedy, certainly you are. You want more money, and if I ask you for $5, you will say no because it’s yours (your capitalist greed at work). Under socialist greed, I could take your money by force. Now which is better?
The problem is when … The problem is when the link between loan and average income is lost. But its not lost money, its money that was always an illusion, it never existed as value. I have done it but I bought 1972 (UK). Now house is worth 36 times what it was then. Along the way there was 16 percent Inflation which helped lots. Really houses are to live in, not speculative investment. Houses DID go down in values in the 1930s.
They love it … They love it because they get less competition. Hell, just look at how much American car companies have bitched and moaned for import quotas.
The world needs confidence in the US $ Dollar NOT more hyperinflation & US Debt! We need LESS US Central Planning, MORE oversight and a REAL free market.
Printing MORE fiat US $Dollars to encourage more Wall Street greed will debase the currency, end confidence in the $Dollar and cause a MUCH larger collapse later!
Real Estate AND the stock market MUST be allowed to return to their TRUE value NOW before the problem grows any larger!
How bubbles destroy wealth.
May 15th, 2010 at 7:22 am
Is there stilll …
Is there stilll money to be made in this type of situation ex. buying wholesale at 250K or is this still a bad market to invest in.
May 15th, 2010 at 7:22 am
I think the …
I think the problems with this analysis would be cured if you spoke in terms of wealth TRANSFER rather than wealth destruction.
May 15th, 2010 at 7:22 am
Just one small …
Just one small error, the seller of the first house gets 920K after paying off his 80K loan after selling the house for 1M. He does NOT get his initial 20K down payment back. That would be absurd.
May 15th, 2010 at 7:22 am
wow, your hindsight …
wow, your hindsight is 20/20
May 15th, 2010 at 7:22 am
but in the modern …
but in the modern times…….money creation depends on the debt….as more the loans are more money banks create….look for money as debt videos…….
May 15th, 2010 at 7:22 am
… or simplified …
… or simplified debt = disaster. The modern English translation of the latin “Mort-gage” is a handshake with death.
May 15th, 2010 at 7:22 am
Sal, this is so …
Sal, this is so funny!
When you tell me these things some of my old collegues’ stories comes to mind. – How they kept getting richer and richer, took out new loans and improved their houses etc. Hahaha, if I knew what you say now, I’d sure be preaching, haha.
Thank you for your insights, this is extremely interesting.
May 15th, 2010 at 7:22 am
What bothers me is …
What bothers me is the printing of money with no true value. The fact is this has been going on since before Kennedy. The world bank can completely dissolve our nation and others by us buying into the ideology that we can lean on false currency which is all determined World Bank standards. This makes a nation of slaves eating from the hand of some shadowy figure behind a desk somewhere. But then again everyone is afraid because no one knows whatelse 2 do.
May 15th, 2010 at 7:22 am
Home improvement is …
Home improvement is real investment. It creates an asset (the pretty rec room and kitchen) that is expected to provide value for someone in the future. The problem is that it’s even more grossly overvalued than the house. So they overpay for it. They might expend $200k of factors of production to produce improvements that are really only worth $20k as a stream of imputed revenue.
May 15th, 2010 at 7:22 am
Some dodgy …
Some dodgy arithmetic here. So we’re ignoring the interest payments, but the seller of the house on the left ends up buying a $100K house for $60K. He should be moving to Costa Rica with only $900K. You’ve knocked his $20K equity off the cost of the house at the start – that makes sense. Then you’ve taken $20K off the mortgage before settling it AND then given him the 20$ back as well. He’s $40K up on the deal.
May 15th, 2010 at 7:22 am
No. Those with …
No. Those with capital can increase their wealth using the labor of others. This increases the burden on the poor, while rewarding the wealthy simply for being rich.
Socialism guarantees a minimum standard of living. Because the poor spend all their income there is little net cost, yet it stabilises the economy as then there are more consumers spending.
Conservatism aims to erode this mechanism for short term gain. Resulting in a crash when the base of the pyramid can not pass up more wealth.
May 15th, 2010 at 7:22 am
basically money is …
basically money is just an idea. the market value of a house at any particular point in time is a sentiment for that particular asset. sentiments vary as people look to other outside indicators ie: stock market, geopolitical issues, environmental issues even, etc…yes there is no ‘wealth’ now, but time was the main factor. the wealth was not ‘illusionary’, rather, that’s not the best word for it….since if you sold at the right time, wealth would be present.
May 15th, 2010 at 7:22 am
Capitalism is about …
Capitalism is about each person wanting to keep his own money. Let’s call that greed, to concede your point. Socialism is about wanting to take someone else’s money. That too is greed, but it has another element: theft. We all are greedy, certainly you are. You want more money, and if I ask you for $5, you will say no because it’s yours (your capitalist greed at work). Under socialist greed, I could take your money by force. Now which is better?
May 15th, 2010 at 7:22 am
The problem is when …
The problem is when the link between loan and average income is lost. But its not lost money, its money that was always an illusion, it never existed as value. I have done it but I bought 1972 (UK). Now house is worth 36 times what it was then. Along the way there was 16 percent Inflation which helped lots. Really houses are to live in, not speculative investment. Houses DID go down in values in the 1930s.
May 15th, 2010 at 7:22 am
thanks for your …
thanks for your vids. get me keeping up with some important and useful theory. cheers
May 15th, 2010 at 7:22 am
THANKS A LOT- IT …
THANKS A LOT- IT WAS GREAT!
May 15th, 2010 at 7:22 am
great video
…
great video
thanks a lot
May 15th, 2010 at 7:22 am
a real free market …
a real free market ? lol
we have nothing but trouble by the free market system.
Because you have only one thing that you must understand my friend, the whole economic drives on greed, and fear.
Thats the only two.
Greed, because its never enough, and fear of losing what they have.
Thats all, and thats why it all is doomed to fail. From the beginning of.
I call it the origin of sin human element.
May 15th, 2010 at 7:22 am
Thanks Sal! Now …
Thanks Sal! Now it’s time to watch the vice-presidential comedy show. Where’s my popcorn?!
May 15th, 2010 at 7:22 am
They love it …
They love it because they get less competition. Hell, just look at how much American car companies have bitched and moaned for import quotas.
May 15th, 2010 at 7:22 am
Corporatism LOVES …
Corporatism LOVES Socialism!
The world needs confidence in the US $ Dollar NOT more hyperinflation & US Debt! We need LESS US Central Planning, MORE oversight and a REAL free market.
Printing MORE fiat US $Dollars to encourage more Wall Street greed will debase the currency, end confidence in the $Dollar and cause a MUCH larger collapse later!
Real Estate AND the stock market MUST be allowed to return to their TRUE value NOW before the problem grows any larger!
Bailout? NO!!
May 15th, 2010 at 7:22 am
Very good video, …
Very good video, thanks!