The Cheap Credit Era

The current age is one of extreme short term thinking. Americans have always been known for taking the short view, but today our culture is built around a “live for the moment” attitude. Sit in a business meeting and exactly no one talks about downstream possibilities. It is all about this month, this quarter or, for the sprinkling of long term planners, the remainder of the year. You see this in our politics, where everyone reacts to the latest polls or latest news event. We are a high time preference society now.

This is why immigration reform is proving to be a non-starter. The Left side of the political class sees nothing but opportunities to rig the next election with foreign ringers, so anything that interferes with that is blocked. The Right side is wholly owned by the cheap labor lobbies, who like the idea of disposable labor. It’s not that the people in charge think their grandchildren will be exempt from the ravages of mass migration. It’s that they are unable to think past the moment. For our rulers, tomorrow never comes.

Just because the people in charge have no interest in the future does not mean the future is equally disinterested in us. That’s what will make the coming years interesting, with regards to the economy. The Fed has finally begun the process of tightening the money supply, after a decade of an extremely loose policy.That means rising interest rates in the US and a strengthening dollar, relative to other currencies. This is not going to happen overnight, but the Fed is going to move quickly now that there are signs of real inflation.

The trouble is s big chunk of the economy have become addicted to cheap money. Take a look at the car business. Every car maker has setup special lending facilities so they can entice buyers. Instead of figuring out how to make cheaper cars, they offer near zero interest and extended terms. You can get from most makers a seven year term on a new car, along with a super-low interest rate. They may even offer cash back you can use for the down payment. There’s even sub-prime lending at the lower end of the market.

Now, the Feds are not bringing back 1970’s interest rates and they are going to move slow. Still, it has been a long time since interest rates have been close to historic averages and that means most people making decisions don’t know what it is like to live in that world. It has been 18 years since mortgage rates were above seven percent. It’s been 27 years since we saw eight percent rates. It’s been a decade since rates were above five percent. In other words, the world has become used to historically low rates.

It’s not just the retail end that will have to come to terms with a world of rising interest rates. Most business runs on credit these days. The bigger the business, the bigger the debt burdens. US corporation have $4 trillion in debt that will roll over in the next five years, according to industry analysts. What this means is their debt service will increase as they refinance old debt with new, more expensive debt. That’s how corporate debt works. Most of it is fueled by bonds, so new debt pays maturing debt plus interest.

Of course, business is not the only institutions relying on cheap credit. Governments around the world have come to depend on the endless appetite for sovereign debt to keep borrowing rates low. When central banks take money off the street, it means there is less money to chase after sovereign debt. Healthy debtors like the US government will not feel the pinch, but the struggling countries in Europe and South America are going to find it more difficult to sell debt. It may not take much to topple a country like Argentina.

Again, the Fed is not bringing us back to the 1970’s. Baring some inconceivable catastrophe, no one reading this will ever see double-digit interest rates again. It’s just that since the end of the Cold War, America has been living with historically low interest rates and it has changed the nature of our economy. Cheap credit makes short term deals more viable and more common. It also increases risk taking. The result of all this cheap money is an economy that lives for the moment. Everyone is in it for the quick buck.

In theory, the slow gradual return of interest rates to something close to historic norms should not have a big impact. Almost thirty years of super-low rates, means most of the institutional knowledge about working in a normal rate environment is gone or heading for retirement. That means a lot of people are going to have learn the hard way about how business and finance works in a less than free money era. Therefore, no one can really be sure what is going to happen as the Feds slowly raise rates over the next years.

126 thoughts on “The Cheap Credit Era

  1. Depends on who is in control. The Globalists want lower, even negative, interest rates as this helps them to squeegee the last bit of wealth out of nations before the whole shit house goes up in flames. Perhaps in America Trump will reverse this trend, but he only has 2 or 6 years left.

  2. Shoot, I forgot a big one. Huge, actually.

    Public pension funds.
    Who manages those?
    The politicals, again.

    What do pension funds do?
    Invest in such things as… the stock market.

    Your tax moneys are being used as a cutout to buy up the corporations.
    One estimate placed legislative ownership of the stock market at 75%, by Federal and state congressmen.

    Ever wonder at the mandates we are forced to spend our money on, while Ginormous Corp and Uni Trust pay no taxes?

    Politicals own the markets in all but name.

  3. Rootless people with at most a nuclear family rather than a legacy have little reason for long term thinking. The new populations demography isn’t wired for it for the most part
    either,

    Also re: saving. A lot of saving policy was built for an industrial age where there were assumptions about population growth and the need for more factories, workers and so on.

    Those conditions barely exist now and nowhere in the industrialized world has above replacement fertility . We had one year, a bubble economy and a confluence of odd circumstances , huge immigration from highly natal Mexicans and three generations tail end of Boomers, Gen X and Gen Y all having babies at once and it managed two years of at or a minuscule amount of above replacement

    Once immigration is not propping up numbers, there simply aren’t going to be people to consume that production surplus and worse much of the production will be virtual goods which means less employment. Craigslits and its ilk employ a few hundred people and were able to destroy the newspaper. Other industries have this problem too

    This means lack of stability, lack of family formation and medium term, less consumers

    Worse when you save other than to pay off debt the lack of anything productive to do with money means your savings often as not goes into big capital so they can buy up housing, turn potential owners to renters and further stop family formation or for big state to spy on and manipulate you

    Until the Chamber of Commerce/Cheap Labor Republicans are removed from all power, no economies can grow since the policies they favor, efficiency, profit for capital and the like are at the current stage as destructive as more liberal ones

    While market savvy people can play the inflation game, I’m not one of them and given demography and economics inflation on that scale doesn’t seem likely. Wages are rather static therefore increased prices results in less consumption not inflation .

    Many nations Japan and the US have been money printing for decades to get inflation with little results.

    All that said nothing is a better investment than paying off debt and ones house.

    As Shakespeare famously wrote

    Neither a borrower nor a lender be;
    For loan oft loses both itself and friend,
    And borrowing dulls the edge of husbandry.
    This above all: to thine ownself be true,
    And it must follow, as the night the day,
    Thou canst not then be false to any man.
    Farewell: my blessing season this in thee!

      • The summary: Benign conditions bring a high mutation load. This load expresses itself rapidly in psychological aberrance first.

        That explains the freaks.

        Cosmo has long printed advice on where the men are- and they are not in the cities.
        Perhaps the shreiking sheilas who run urban media and can’t find a boyfriend are up to an instinctive strategy.

        They encourage their sisters to breed with high testosterone males to counter the increasing mutie load deficit.
        I note that most miscegenation ads, which women write and like, are centered around a black male figure.

  4. The unwinding of the Fed balance sheet expansions are perhaps the real reason behind these very planned and forecasted hikes. Who will buy this paper flood at an effective 0% return?

    What happens when the hikes stop being effective against inflation? Then they must rush to get ahead of it and we could easily see those double digit interest rates, in an effort to do what Volker did in 1982. But the end-game is different now. Scarier.

    • This is as good as banks charging people to save their money, with zero interest but lots of storage fees. How in the world is Bitcoin not exploding?! F*ck the central banks and the Rothschilds. Here’s hoping their days are past.

      • Bitcoin isn’t exploding because it is a ponzi scheme that is on its last legs. Everyone who is going to get sucked in, is in. No more greater fools for this one.

  5. Here’s what I think comes out of the ashes of globalism (which Trump has killed). Many industries and products are of strategic necessity; we have to be self-sufficient in these areas in order to avoid being deprived of them during wars, embargoes, etc. Food is such an item, and so is steel making. Media too is strategic, and that’s why it will be

    All the centralized manufacturing and food production also leads to a society wide fragility. Therefore means of production will be distributed across many more locations. All of these measures will lead to much better jobs being produced, that pay living wages (and then some).

    This decentralization process has been going on for at least a decade, in other areas of the economy.

  6. Back when “Time” magazine was actually of some use, a cover story was about MBA’s and their emphasis on short term gains feeding their bonuses was destroying the economy.

  7. Silicon Valley is also addicted to cheap money. Very few of the so-called unicorns ($1 billion plus valuation businesses) are profitable. Uber, Netflix, Spotify, all of these companies are losing money, some of them massive amounts. The few that are profitable (Google, Amazon, Facebook) have razor-thin margins that will not survive in an era of higher interest rates. These companies are running on the basis of very cheap capital. The tech scene is in the third great bubble of its existence, one that will be seriously deflated once the interest rate rise to rational levels.

    I just finished reading “Bad Blood” which is about Theranos. Theranos is essentially the Enron of Silicon Valley and will have an equally bad ending. I highly recommend it.

    • Maybe it’s better to study the winners, the smart people that have something real to offer, rather than the losers.

  8. “For our rulers, tomorrow never comes. Just because the people in charge have no interest in the future does not mean the future is equally disinterested in us.”

    So eloquently and succulently put. Every politician should have this engraved on their desk,

  9. I have a 2013 F-150. It’s in great shape. Every time I take it in to Ford for some routine mx, I get a call within a day or two from the sales department asking me to trade it in and upgrade to a band new one. I teased the girl on the phone mercilessly, “So, you want me to trade in a truck that I absolutely love, which is 100% paid off, is in mint condition, etc. to go $50,000 in debt on a new truck that I don’t need?”

    The thing is…for a lot of people…her pitch would work.

  10. In the early 1990s, I drove an 1984 Toyota truck (known the world over as a Hil-lux) with 95 horsepower, vinyl seats, a 5-speed stick, factory cruise and A/C (that my old man had to get added at the dealership when he bought the truck). The floor pans had just vinyl with no carpet, but this truck easily hauled boats and stuff that a teenager needed. And it got about 25 mpg in the city and 30 mpg on the road.

    I think this truck cost my old man just $5k when new and I actually sold it for $1,500 with 384k miles on it. It had the unkillable 22R 4-banger that ran like a top with regular oil changes.

    Now every truck has leather, giant V-8’s with 400-plus horsepower, power everything and get ridiculously low gas mileage. Automakers can’t sell a Hil-lux here anymore (which is the kind of truck I’d want) because our market wants luxury trappings without having to pay for them. The idea of hauling dirt with one of these country boy Cadillacs is absurd to me.

    I’m amazed at every neighbor in my subdivision in the ATL exurbs with a 5-year-old or less F-150/Silverado/Tundra/Ram/GMC who I know paid at least 42k for them with 2wd and at least 50k with 4wd. The 7-year note explains a lot of this.

    That and every one of these trucks is parked in front of a 300k house. I can’t think of a scene more emblematic of this era of easy money.

    • Your post brought back memories of a similar red-colored high-mileage Toyota pick-up truck used to haul recycled papers in the 1970’s. That little truck was like a Timex watch, she just kept on a-ticking. You couldn’t kill it short of a tactical nuke. Like you said, I wish they still made them today.

    • I paid cash for mine. Haul all kinds of shit with it. Couldn’t get to my hunting property without the 4wd. Drives like a car and can accelerate out the wazoo. Also, crew cab trucks are the least likely vehicles to be stopped by state police.

      • I can drive anything I want. A year ago I bought a 20 year old Dodge Ram shorty with 100k miles. Paid $4k for it. Best damn vehicle I have ever owned. Hard on gas, but the trade off works for me.

    • F-150s and 1500s are for people who don’t really need a truck that much. For serious hauling F-250s and 2500s are the basement.

    • The Tacoma is the North American brand for the Hi-Lux. You can get a pretty decent base model for not too much on a relative basis, but I’d stay with the standard transmission.

    • Nowadays Dad has a pickup, Mom has an SUV, and them and their two kids live in a 2800 sq. ft. house.
      50 years ago Dad would have a station wagon, Mom might have a car, and they live with four kids in a 1200 sq. ft. house.
      Do that now though?? My God! Siblings of the same sex would have to share a room! And they’d all have to learn to get along with one another instead of vegging out in different corners of the house with their ipods.

    • I’m new to the truck world and was thinking of getting one. I started looking for ads and reviews online to learn the market.
      Speaking as a total newbie, I was shocked by how utterly retarded the truck world seems to be. The closest thing to what I would want is the Ford Ranger which isn’t even made anymore. My old Mazda 3 can fold its rear seats down and I can load 8′ long downspouts, 2×4’s, whatever. Most beds on these “country boy Cadillacs” are not 8′ long… So my 11 year old Mazda 3 has superior cargo capacity (at least in that regard) to a giant truck? WTF? And why can’t I find a truck WITHOUT an extended cab???
      At this point I’m either getting another Mazda or maybe Honda Fit.

  11. So one time I was telling Mom “new economy this, credit that”- she looked at me and said, “boy, you are a fool. I’ve seen the banks fail before.” (In FDR’s bank holiday.)

    A few years later came her last day in this life. I was with her to the end, and telling her the day’s news. The Meltdown had just hit.

    “Ma!” I said. “The whole financial system is collapsing! Banks are locking up all over the world!”
    She couldn’t speak anymore, but that little smile of triumph on her face…

    • I also had my delight at a very old man’s rage. He remembered the sheer misery and poverty of those times. His blue eyes blazed as he shook his fist in my face and cried,
      “You know who I blame?!
      I blame those gott…damned…Republicans!!”

  12. And with rising rates will come the following:

    – Debt forgiveness for all student loans
    – Low interest rates are a human right
    – More suicides

    Personally, I’m looking forward to higher rates. I used to have a sweet Zurich money market account that cranked out reliable 6% returns for years. They shut it down a long time ago because I would have had to pay them to keep it open. As rates go up, monetary tools like this become more prevalent and you’re not over-exposed to stocks.

    Anecdotal sign of change: our bank offered to switch us to a savings account that will actually pay something resembling interest. It was a short-term offer, good for a year, as they test the waters on whether savers will actually save more money if offered a better return (duh). It’s been at least a decade since the banks even talked about savings accounts of CDs because those were net money losers in a low interest rate environment.

    We also own our house with just 5 years left on the mortgage. Every so often we talk about selling the house and buying 5 acres in the forest. And then we look at the equity and the cash flow and think, “Why move?” In 5 years I’ll only have property taxes of about $1500 and my homeowner’s insurance. We watch people roll over house to house to house and new car to new car to new car, and we just smile and waive. Every time they do that they rob themselves of $50K-$100K in retirement savings.

    Our last big financial goal is free, or nearly free, college for our kids. We put them in an after school program called Kumon when they were 8. Now they’re in high school getting crazy high test scores and GPAs. Odds are very good that we go 2 for 3 or 3 for 3 on free or nearly free college. Long term planning FTW.

    • Americans coming up after you have no idea what it means to have a job that pays this kind of money, for living, getting married, buying a house, raising a family, saving, retiring, investment. Now, thanks to flooding of immigrants/refugees, enough is made to barely get by, something many of you older, successful men may not have your finger on the pulse of. The financial investments/savings is one of several big old systems that will fall, die off, as not enough people coming up having any kind of use for this kind of thing. Plus, it supports all the worst kind of sociopathic parasites who have nothing else to contribute to society other than creating and chasing money made from nothing but concepts and paper. We’re devolving from high-trust to low-trust society so get used to it. Instead, seek out physical skills of creating usable machines and furniture and, above all, farming. Whites need to come together to form sustainable agricultural communities built of farming, manufacturing and services, outside of mega-banks, debt and empty consumer-living. Home school our kids. Small government. God-fearing. Having each other’s backs.

    • If your kids are “non-white” (our many white-looking latinos even can take advantage) and have a modicum of intelligence, it’s easy street for them in terms of college admittance and jobs. Same for blacks. Only whiteys have to pay for our “privilege.”

    • At least we have some to worry about. And if it weren’t for parasites like you, we would worry about it a lot less.

    • I have sincere pity for black people. All people want to take pride in the accomplishments of their ethnic group. Imagine being part of a group with negative accomplishments. Fortunately for them, they are usually too dim to perceive this problem.

      Okay, I will admit they have some gifts with respect to musical improvisation.

    • Money is what make life good duckster and you can ask any person of color and they” tell you they want money than anything else.

  13. I have heard it said that democracies don’t care what kind of nation they hand down to their children, whereas a monarch is vitally interested in handing down a healthy nation to his heir. Make of that what you will.

      • Venice was truly a light in the darkness of the world, but I am not sure the governance model would scale to a nation as large as ours.

        • How about a doge for every U.S. state? Wouldn’t that be a beautiful endeavor? TeaPartyDoc, help! I have none of the historical depth that you do. With blessings.

  14. immigration restriction is a non-starter because congress is getting rich by preventing immigration restriction …congress gets access to IPOs and insider trading tips, which makes them richer…those who dispense these goodies only do if the congressperson plays along…those who make congress rich are getting rich themselves off the economy, off of assets such as stocks and real estate…immigration increases population and consumer demand, which is 80% of the economy…

    another issue–you assert that the Dems want immigration because it helps them win….I disagree…yes, some immigrants can vote, but most cannot…the Dem politicians want more immigration for the same reason the GOP politicians do–because Big Business will make them rich if they keep cramming immigrants into america…

    you see, the issue is not short term or long term thinking on the part of the elites…you assume our elites have the best interests of america or of their political party at heart….no, our politicians are looking out for their wallets…they want fatter wallets…

    there is NO political solution to this mess…all our governmental institutions are out of control, and in fact all our major societal institutions are out of control…and until we realize that voting changes nothing, things will only get worse…

    • I agree with your message but I am curious if you can substantiate the particulars. Can you demonstrate to a sceptic that “congress gets access to IPOs and insider trading tips”? What you say is probably true, but can you support that claim?

      Here’s a specific example you can use: ‘GOP megadonor: “I’m not writing one penny to any of them” until DACA is resolved’. Search Politico for “Mike Fernandez”. (Why would someone with the last name “Fernandez” be so adamant about legalizing illegal Hispanics?)

      Finally, ellipses are not your friend.

      • Congresspeople’s investment portfolios typically return 20% per year, as a group. This is wildly out of line with any broad group of investors. Typically, 20%/yr individual iterations are offset by the bad iterations in a group result.

        Know also that Congresspeople are solely and specifically exempted from “insider” trading on privileged information. It is legal when they do it. Not for you and me.

      • a very good question!’
        there is a poster on zerohedge who used to work on capital hill and gave us the inside story…these congressmen fight and scrape for access to IPOs, insider tips and sweetheart contract deals…just look at the net wealth of congressmen over the years…they are getting super rich on their gov’t salaries? I doubt it….

    • People, you have no idea of the scale of the looting by the political class.

      A large part is based on the CAFR, the certified annual financial review. Every townlet has a small paragraph that these assets will be paid before even the light bill. The assets are not listed.

      This is institutionalized looting, national by law since 1972. Remember Congress passed the Omnibus Budget Act in 1974, right after Nixon was stabbed, killing the President’s line-item veto and giving themselves near-unlimited credit.

      How it works is this:
      Public funds are “managed” for yield “in the public good.” Who manages, then?

      The political class has given itself the ability to borrow, at ultra low cost, against ALL public funds.

      You can’t borrow against the fireman’s widow and orphans’ fund, but they can. That goes for the Highway Trust Fund, school construction bonds, Social Security, anything.

      The institutionals walk them through the paperwork to form private investment groups to invest in, say, slums in Chicago or lux hi-rises in Canberra. They then provide templates of possibles on offer.

      “So, Senator X and Senator Y, your new group this week can take advantage of any of these 3 developments we have at 2%, with a planned return of 14%.” Each senator has 15 to twenty of these deals on his desk at any week.

      Each state has “legislative law lists” of the payoffs. The governor gets $5 million this year, the AG gets $2M, and so on til some schmuck at the bottom gets ‘busted’ for some trifle to make it look good. They know. They all know, that’s why they’re in the game and mum about it.

      Now please consider the tax evasion.
      Trusts, foundations, NGOs, ‘community outreach’ and social ‘task forces’.
      Public-private partnerships.
      Boondogles such as bridges to nowhere, windmills, Solyndra, welfare Projects.
      $21 trillion lost in 19 years to two agencies alone, HUD and DOD. FHA, FNMA, and GNMA shenanegins.
      Interagency finance. Non-GAAP accounting.
      The inability to count the number of departments, much less give a prospectus of government spending.
      Bankrupt municipals investing in bankrupt municipals.
      FDI by our politicals and theirs as the money is laundered or hidden overseas.
      Naked shorting, long-term options, pump-and-dumps, milk-and-bilks by ‘allies’.

      Go up another level to international.
      The institutions and politicals running arcane rivers of money through their hands that we cannot see or touch.
      The profits of shady and illegal activity that are unaccounted for, yet used as an invisible fulcrum to lift up all the other assets classes they own!

      This world is being robbed, the middle class grateful for small succor. Marx was right, the Kapitalists and Communists will turn money to low-cost, risk-free piracy instead of letting granpa loan the savings he has to the kids, who have the energy to use it.
      They more they get, the more they can get, and they will not stop.

      This is becoming the terrible world of the Owners- and we will be reduced to their brutalized, tyrannized slaves.

      • This is becoming the terrible world of the Owners- and we will be reduced to their brutalized, tyrannized slaves.
        Yep because nobody wants to jump out of the pot to keep from being boiled alive…

    • The U.S. voting system is a shambles and it is absolutely no problem in many places if an illegal immigrant casts a vote. All issues can be solved using common sense ID and technology solutions.

    • The question that needs to be put forth to Americans is what kind of culture we want to live in? What kind of demographics? We’ve demonized asking these questions because the business interests do not like the answers of most natives.

  15. You talk about how no one thinks long term and then about inflation and rising interest rates. Did you mean to make the point that higher interest rates will force at least some people to think long term and then end the article without explicitly doing so? It would have seemed a natural conclusion to come to.

    I agree with Hungus. I like the idea of higher interest rates. The historic average of 4% sounds fantastic to me right now. Have operated on a cash basis for at least twenty years with the only benefit being no debt. It would be nice to have earnings outside the stock market and increasingly risky municipal bonds. Have never done T-bills.

    • Higher rates increases the longer time preference element of decision making. Has to be a good thing, overall.

    • Americans need jobs that can pay our inflated costs of living here. People who don’t earn enough to make ends meet don’t have many considerations about interest rates and inflation. And we need to waaay cut down on the government rules and regulations that strangle the average person with taxes and fees.

  16. You left one thing out of your analysis. The real economy is already hot and still gaining heat. Manufacturing is growing; companies are moving production capacity back to the US. And Trump is only getting warmed up. He is innately a builder; quite clearly he intends to rebuild all the dead cities, and replace the old grid. And I am pretty sure we are all going to be swimming in gravy for a good long time. And I am willing to bet money he privatizes that $20T national debt.

    • The US advantage has not entirely been in taxation, or in its lack of meaningful labor laws, but in its low energy costs thanks to fracking. The average EU country has electricty prices that are multiple times the average red state costs. Red state deregulated energy markets also help virtue signaling Silicon Valley by lowering the cost of windmills. Without fracking, the recession would have persisted longer, and Obama would have lost re-election.

  17. This issue has the potential to divide the country more so than any other factor. A shrinking cohort of our society lives within their means (very limited or no significant debt) and a growing (possibly majority) fraction are drunk on debt and fully expect the government to forgive massive amounts of it in order to maintain the peace. DC politicians are playing the long con and gambling that debt slavery will ensure their incumbency and afford them the latitude to raid 401k’s as a means of solving this problem.

    • “This issue has the potential to divide the country more so than any other factor.” no

    • Oh double plus yes.

      We barely avoided a revolution when the housing and stock market collapsed in 07-08. Had the banks closed, people would have went kinetic on those Wall Street bankers and D.C. pols.

      As it was things ground to a halt. I live near the rail line that brings containers from the Port ot Long Beach to the rest of the country. At that time, the shipments almost ceased. The fear was palpable in the big box stores. That’s the sort of stuff you don’t want to see occurring. The last time I saw fear like that was during the LA King riots.

      The next time we won’t be so lucky since the bubbles are much worse and we have no more magic bullets to use. The Cyprus option of looting bank accounts is a verified death sentence to anyone who promotes it. Given we have millions of men who can put a bullet in a deer at 500 yards or have seen extensive combat in the ME and who now are civilians and armed to the teeth.

          • The government can mind 200K no problem and hand you 200, 1000 bills at any time it wants to and do this for any number of people, We have an entire continent full of resources

            How much these buxs will buy will depend on a lot of factors but the US really can’t economically melt down as easy as some think and given that wages are so arbitraged down, getting huge inflation is harder than you think.

            Some say the actual U6 unemployment rate, among all working age people is around 20%

            stats via shadowgov http://www.shadowstats.com/alternate_data/unemployment-charts

            I mean even with burrowing/minting half a trillion a year or more for and massive borrowing for decades on end plus handouts to big business the effects have been modest

            Fundamentally inflation requires consumption and wage flexibility and despite chamber of commerce bleating , wages are stagnate and will remain do for the indefinite period

            In the end the US isn’t going to have some convenient collapse, its just going to get shabbier and more like the rest of the Americas, poor, stupid, low trust with a face nice places

            Caveat the Left get stupid and pushes people to far or somebody starts a real civil war. We really aren’t even to Bleeding Kansas or Days of Rage yet though, just a few political attacks by the Left

      • “We barely avoided a revolution when the housing and stock market collapsed in 07-08” . hysterical nonsense

      • Doubtful. The 2008 bubble busting was nasty but I was in So Cal at the time, still am unfortunately and there were no shortages and no fear of revolt.

        And also give that the country has largely been raped to death by immigration , Cultural Marxism and and looters and the result has been been crickets the risk from the militias is tiny.

        Maybe federal gun confiscation might do it maybe or some future Crispius Attucks but Americans can barely talk to one another even in redneck lands and a lot of them are doped up on Oxy or Weed.

        Maybe this has changed, I saw bit of the old spirit on Lisa Ling’s surprisingly fair CNN?! show on militias but I am doubtful there is all that much and while there might be enough Minutemen to scrag the ruling class , they won’t be able to take power. Libertarianism is a hell of a drug

        Until that changes , the system can’t be changed by force, Rule or be ruled.

    • Yeah, we’re already in the Latin American economic model, with few rich and many poor, job scarcity and low pay, our country full of ignorant people. 401K’s and mortgage interest rates are unknown luxury problems that people of our shining new “gig economy” have no understanding of, let alone CD’s, stocks, investing. The last people to grow up and work in a functional, financially rewarding country are in their 50’s and up. Everyone in their 50’s and below have been exposed to expensive living in a country where jobs barely pay enough to get by. It’s going to blow up. The notion that there’s cash floating around waiting to be applied in a productive way is a completely foreign notion to most Americans, not because of ignorance but because of Mexican-donkey low wages and accompanying lifestyle. Very sad. The right must offer an attractive solution otherwise it’s a no-brainer that socialists and communists will get voted in, with the way we all live now.

      • @Ursula
        Have you ever known anyone that will give up an easy thing for something that takes hard work, courage, and morals?
        The right will never be able to compete with the socialist until the pain starts and it starts falling apart…
        The right needs to be building safe havens(communities) so people have somewhere they can thrive now and survive later when it all crashes down…JMHO

  18. My company competes in several market sectors. One of them has a very long sales and service cycle – and we are terrible at it. I’m in the midst of a “root cause analysis” for the bosses. The problem boils down to their impatience and short attention spans.

    • I’m sure that they’ll be delighted when you tell them your results. Doubtless there will be a promotion and a raise in it for you. Or something.

      • Rather than tell them that, I lead them through the early stages of the exercise, then let them follow the obvious logic trail. It’s fun to sit back and watch.

      • Tell them that at the start of your report.. They will have forgotten it by the end.

  19. “When trouble is sensed well in advance it can easily be remedied; if you wait for it to show itself any medicine will be too late because the disease will have become incurable. As the doctors say of a wasting disease, to start with it is easy to cure but difficult to diagnose;after a time, unless it has been diagnosed and treated at the outset, it becomes easy to diagnose but difficult to cure. So it is in politics.” -Niccolò Machiavelli, The Prince

    • I haven’t noticed it mentioned anywhere, but Trump clearly has read The Prince, and uses it as a practical guide. Who else exemplifies (better) the maxim “Better to be feared than loved, if you cannot be both.” ? Is his neutering of the MSM not Machiavellian in execution?

      • President Trump is way too nice to the lying, stupid media. They are pushing hard with their nastiness to force him to get authoritarian on them. And then the haters will create from that a great first-amendment-violation excuse to impeach him. Then hell will break loose. Or, it’s kept in check till Trump is gone, then we dissidents will all have hell to pay to the vengeful Progressives.

        • So be it, civil war is probably inevitable anyway and we have many bullets and a long list of scores to settle.

          In the end its either us or them in power and as they’ll gladly send all of us off the gas chamber without a qualm , we’ll have to do the same to them.

          I’m not liking this one bit and am hoping against hope it can be avoided but its what 3-7 years or so off depending ?

          maybe the 2030’s at the latests . I don’t think anyone is prepared, hell can be prepared but c’est la guerre

          • They don’t intend to do the fighting, they intend to get a bill passed through stuffing ballot boxes with illegals’ votes that states that they win, we lose, ha ha. They expect the police and army to just shrug and say, “oh well,” and obey their every order. They have no intention of doing any fighting themselves.

  20. Growing up with the peanut farmers double digit inflation and mortgages over 20% provided me with a valuable lesson in money management.

    Even though there is a retirement plan at my former employer it does not have a COLA. When pointing this out to coworkers they couldn’t see the risk. The company also has a 401(K) and I would be surprised if more that one in four were enrolled.

    There are going to be some very surprised individuals in the years to come.

  21. I think some places you say double digit interest in the 70s when u meant inflation.

    • No, interest too. During the Carter years, I took out 5% life insurance loans and put it in 15+% 12 mo. CDs at our local S&Ls. Cashed them at maturity and paid off the life insurance loans with a tidy profit. I believe the pointy heads call this arbitrage.

    • Assuming you’re not being sarcastic, 4 years used to be pretty standard. 2-3 if you had some money saved up. I still remember when Ford came out with their 60 month 0% packages for a short period of time. Then 72 months started to crop up.

      We’re seeing the same thing with college…what used to be a 4 year thing is now a 6 year thing…people with bad financial knowledge spreading things out to make it look cheaper on an annual or monthly basis…but actually winding up spending much, much, more than they ought to.

      We do the math with our kids when we buy stuff involving debt to show them the difference between putting 50% down and paying off the loan early vs. financing all or most of it and paying it off over 4-5-6 years. It’s many thousands of dollars difference. “Do you want to pay a banker, or do you want to pay yourself?”

      • Longer terms on car loans are not a problem if the rates are near or at 0%. Present value/future value and all. Long terms with high rates are a killer.

        As to home mortgages, again, a low fixed rate is not so bad. Especially if you are in a position to pay it off if you choose to. Playing fixed rate borrowing against the opportunities available for saved up capital is the thing. YMMV.

        One “problem” is that the middle class has 80% or more of their wealth tied up in their home. Wealthier people have 10% to 20% there, typically, freeing up capital for other opportunities. That makes the middle class dependent on rising home values to build their assets. Depending on things to go “just so” can be a fool’s errand. It also ties up capital that could otherwise produce income.

        • Agree with all your points but one. The issue I have with long-term, low rate, loans is they tie up money (cash flow). If you take a 72 month 2% loan to keep the payments down, but spend 6 years paying off your car, you’re basically tying up cash.

          If you’re going to take that kind of a loan deal for lower monthly payments, use the money you save over a 3-4 year loan as a savings cushion and pay the car off early. That’s typically how we buy things like cars. Bigger down payment, longer loan term (for the low required monthly payments), but we pay it off in 2-3 years not 6-7 years because we managed our cash flow effectively. And we’re still saving on the interest, just a smaller amount. Our most recent car we flipped it and put a big down payment and a 3 year loan term. This time next year the car will be paid off, and it still has some new car smell.

          I think the whole point of a 72 month term is to get people into cars they cannot truly afford. $399/mo seems like a good deal on a brand new car. It’s just crap if 6 years and 100,000 miles later you’re still paying $399/mo for a very used car. $399/mo that you could be using to help your kid with college or buy a new furnace or just saving for a rainy day.

          My wife and I are very much looking forward to taking our 100% equity in our paid off house and buying something 1/2 the size with no mortgage as we downsize. We can take that $1200/mo mortgage payment and go on trips, and upkeep on a house half the size is a big savings too.

    • Cash or as teaprtydoc noted 2-4. People in the past also kept most cars 5 years or less not 10 ten or more as they do now.

      But again in 1956 , a house was 5 years pay for a typical worker and a car was 6 months pay for a nice one.

      These days a comparable car is about 2 years pay and a house 10. People are roughly half as rich as they were and its masked by two wage earner families and having less kids,about half as many.

      And note making an argument that people are getting more care as Economic Liberals are want to do is disingenuous bullshit .

      Productivity has vastly increased and while there are more bells and whistles and safety and reliability,

      if advances in technology and productivity and were spread through the population at the same rates profits would still be high but the work week would be probably 30 hours and a household would have one wage earner.

      Basically 1% of the population got all the gain, 9% or 10% held even and everyone else got a 50% pay cut

      As for a fix, not a clue? Even if the US were homogenized by force somehow and the elite removed from power, youu’d require rather tight economic controls on tech trade , economics and the like and essentially a closed economy with Distributism and tech driven ratchets in order to have stability

      The US population isn’t going to tolerate that until they learn Horatio Alger was function and that you can’t life yourself by your bootstraps and only will they do it if we face an existentialist threat to our survival from outside

      And yes technically we do face such a threat, from immigration and from low fertility but its hard to justify an economic dictatorship because the TFR is 1.7 even though its probably the only way to prevent serious decline

  22. Amidst the growing tech-fueled asset bubble currently in intermission…it is important to remember that the Fed’s own data points out that 40% of the country can’t cover a 400 dollar expense, and 60% can’t cover a 1000 dollar expense. Much of the lower class spends irresponsibly, along with certain “poor taxes”. I’ve known many co-workers dinged by overdraft fees and short-term loans. Our underclass also doesn’t do their own/shared cooking from scratch as much as the immigrants do. Don’t forget the student debt, the lifeblood of the higher-ed racket.

    • Few ever point out how self-serving it is of neoliberals in the FIRE economy to chide the native working class that moar education is the solution. Rarely do those same neoliberals shame business into training their own workers, rather than expecting it to be funded by taxation or student debt.

      Trade barriers can’t possibly be a solution against predatory Chinese behavior. Not as if Israel and Japan have been reduced to Third World GDP levels.

  23. I do think there are those among our elite that have a higher time horizon. Unfortunately for us they are of Jewish and Chinese backgrounds, a small but highly salient number are of both backgrounds.

    If today marks the beginning of the opening of North Korea, it will be a colossal battle between Chinese, Chaebol and Western capital. Left unsaid is how Russia has been outfoxed in their efforts to get North Korea as a client state to counterbalance both China and the West-aligned East Asian countries.

    • Russia doesn’t have any money, or any influence, and every other country knows it. The only people who wanted to immigrate to russia, were North Koreans. And now even they won’t want to go there. Russia is a shithole filled with shit heads.

      • re: “The only people who wanted to immigrate to russia, were North Koreans.”KMH

        The Chinese are streaming North and taking Russian Brides in Siberia.

        Dan Kurt

        • China will take over Canada long before they grab Siberia. Even with the repeal of the one-child policy, China is a nose-to-the-grindstone culture not dedicated towards affordable family formation. Culturally similar, but less autocratic, South Korea and Taiwan have lower fertility rates. Taiwan is actually allowing mass immigration, I suspect as they think immigrants will be more hostile to reunification on the Hong Kong model.

          • The Russians cannot defend Siberia , it’s china’s for the taking. both countries have declining pop. but china started so much higher than Russia. The truly astounding thing about Russia is they have about the same population they had 100 years ago. WW!, the communist revolution , the gulags and death camps , government induced famines , and wwII have caused enough death to almost completely wipe out the population growth of 100 years.
            e

          • Jewish Bolshevik Communists wiped out tens of millions of Christian Russians, Orthodox and Cossack free men, from which Russia is still trying to recover.

          • Remind me again what the name of that jewish supreme leader that oversaw all that killing? Stalinberg, Leninstein, something like that I think.

          • Though a per-se Jew may not have been “in charge,” the killers were directed by Jews who were dispersed throughout Communist Russian governance. This is easily confirmed. Just like we see with today’s Israel and Palestine, for every Jew killed, the Jews will kill at least 10, maybe 100, Palestinians. That’s how they roll. Russians want to have a jewish pogram after being economically raped by jews? Fine, jews will kill at least 10 Christians for every 1 jew, at least. That’s how they did, and still do.

  24. I dunno how they do it myself. I see people taking on debt without a second thought, and the numbers would keep me awake at night. Saw recently that 65% of Canadians are retiring with a mortgage and I have just one question for those people: are you effin stupid?

    I am not rich, but thank God I am free. The bankers don’t like me, and I don’t like them – so I’ll pay cash, thanks.

    • Thing is, you want to hold debt during inflation, because you will be paying it off with devalued dollars (over time). My mortgage is going to be a piece of cake to pay-off, after 5 years of beautiful inflation.

      • So people thought back in the 80’s, Karl. When double digit interest rates hit, they foreclosed on their mortgages and jumped out of windows. At today’s rates of inflation I think you’ll be looking closer to 10 – 12 years for that to happen.

        • A lot of loan instruments are based on short-term thinking. ARMs are one (figuring the rate won’t go up or reach the cap). I had an ARM on my first house that went up 2% over about 3 years. When rates came back down, I immediately refi’d. Last time I ever considered something like that.

          Also those interest-only loans popular in the 2000’s and the double-mortgages used to avoid paying mortgage insurance. We used to watch real estate programs on HGTV back then, and scream at the TV “Are you nuts!?” when some lower-middle-class family would buy a $250,000 house on $40,000 salary using a double-mortgage to avoid the PMI. All of those people, all of them, lost their homes in the housing crash.

        • My mortgage is less than 3%, so no problems when the interest rates go up. Have to be in the right place to catch a wave…

          • What happens when people buy in at 3% and then rates are 6% down the road is that the house will be priced near what that original payment would bring at 6%, because you didn’t buy a home you bought a payment. To sell you take a hosing for half the value.

        • Right, and it deforms the economy in deleterious ways bc people spend in a way to secure against inflation, for example, buying more house than they need or would have as a hedge. That has environmental and ecological consequences!

          • One of the purposes of government to provide sound money, not to try to create hidden taxes for ludicrous wars and social programs

          • Keep in mind no one is advocating for inflation (or deflation) just talking about the best way to profit from what is coming…

          • Savers put money in instruments that provide a good, safe income. Bonds and equities do that. Inflation is good for neither and requires a lot of skill to navigate. And that is unfair for the lay investor.

          • You sound as if you think of the stock market as something other than a crooked casino?!

      • I get the theory, but debt isn’t generally your friend. With high inflation comes high interest rates. So, higher inflation helps a guy like me who has lived in his house for 10-20 years and is close to paying it off. But for new home buyers, high inflation means home prices are over-valued and the high inflation drives high interest rates. So the home you need is too expensive and the bank wants 8%. That’s the trap my Aunt and Uncle were in back in the late 70’s and early 80’s when everything was double-digits.

        When lending rates break over 6%-7% the economy is going to have to re-wire. I think 30 year rates are at 4.5% right now. I refi’d in 2009 at 3%.

        I tell my kids and everybody I meet “no debt, no debt, no debt”. Pay cash if you can, finance as little as possible, pay it off early. Our entire college search is predicated on how much debt my daughter will have upon graduation (goal: $0). She liked School X, I showed her the debt at graduation at current loan rates = $964/mo loan payment for 10 years. That’s probably 25% her take-home pay IF she has a job on day 1, and she still doesn’t have a place to live, transportation, or food.

        All debt is bad. Some is useful, but only on the principle that all debt is bad.

      • Karl–Yeah, but then you get robbed at the back end with higher consumer prices, that exceed your fixed income.

        • A person on fixed income had best get their cost of living locked down — now — otherwise its Purina time for them.

          • Don’t eat the dog – you’ll need the early warning system for when the diversity gets angry that you’re not giving them more gibs and feels like killing you.

      • Debt free is the way to go. If there is inflation everything gets more expensive and making payments may not be that easy even if those payments are worth less. No debt means an interest rate of zero, no matter what the Fed does. Paying off debt is the only “investment” with a guaranteed rate of return.

  25. Everybody is awash in cash looking for a return so you get a lot of stupid deals. Those will get painfully exposed when you can get a risk free 5% on short term T’s.

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