Visual Inflation

[WILLIAMS5232]

What kind of person pays for a car or holiday using a loan?

A car I can understand, but I don't think anyone pays for a holiday with a loan. That would be ridiculous.

Ever heard of a credit card?

visa and mastercard loooove november and december.

ho ho ho... merry christmas.

[huamulan]

Using a credit card is the same as taking out a loan. What's wrong with cash/bank transfer/debit card?

[BigBallinStalin]

This is kind of accurate.

It just takes longer for people to realize the effects of inflation.

Essentially, it's a short-term "fix" with long-term consequences, which people often overlook (except Bernanke, who is aware of this).

People want something for nothing, so new money is lent into existence. This is to satisfy short-term demand, while ignoring long-term consequences. It's how the US funds deficit spending.


Many people, who demand that the government provide this or that, unknowingly also lend support to a primary cause of many of the US' problems. It's amazing to see this happen.

Hey you really meant it when you said you dont understand demagoguery!

Hehe, jk.

I dont think it's as black and white as you make out though. The recent spanish one is propping up banks to counter their poor investments in a housing bubble right? So sure its going to protect a few dumb banking execs, but is it not protecting many joe averages as well?

So yes the long term consequence is pretty bad (inflation); but isnt the short term consequence just as dire for your average joe?

Apologies if this is a little ignorant or under-researched; I havent thought it all through.

So, there's basically three ways to think about this issue:


If you assume that the policymakers and politicians are well-intended individuals, and that they can actually manage these economies with no significant knowledge and incentive problems, then your criticism is correct.


I tend to think that they are well-intended but lead themselves into negative, unintended outcomes.

Or, I tend to think that they are self-interested (politicians mainly), who use Keynesian economics in order to promote a sense of political control and to distribute funds to whoever they deem, so that they can secure more votes and maintain their careers.


It just depends on your assumptions. 1) well-intended with great knowledge and incentives, 2) well-intended yet lacking knowledge and/or incentives, 3) not well-intended, and/or simply self-interested and rational in that sense.


(after reading the above, I'll answer your questions. I'm just providing some background info in relation to the general tone of your post.)

[huamulan]

Money is not being 'created' for the Spanish bank bailout. It's money lent by the European Union (i.e. the EU lends money it already has).

[Night Strike]

Using a credit card is the same as taking out a loan. What's wrong with cash/bank transfer/debit card?

If you pay off the credit card every month (like I do), then it's the same thing as using cash or debit, but better. There are more protections on credit cards, including the ability to dispute charges if something shows up that's not supposed to be there. Plus it's not directly linked to your bank account, which makes it much better for online purchases. It's much easier to just cancel a credit card if it gets lost and there are many other protections available if someone starts using it before you get it canceled. Plus, credit cards build up your credit score, which helps you get better interest rates on future big loans.

[BigBallinStalin]

Money is not being 'created' for the Spanish bank bailout. It's money lent by the European Union (i.e. the EU lends money it already has).

Wait, who exactly is lending out the money? Who authorizes these bailouts?

By EU, do you mean by unanimous decision from each EU member? If so, whose money is being lent out? Each government must take some of its reserves and lend them to Spain at some proportional amount?

[Lootifer]

So, there's basically three ways to think about this issue:


If you assume that the policymakers and politicians are well-intended individuals, and that they can actually manage these economies with no significant knowledge and incentive problems, then your criticism is correct.


I tend to think that they are well-intended but lead themselves into negative, unintended outcomes.

Or, I tend to think that they are self-interested (politicians mainly), who use Keynesian economics in order to promote a sense of political control and to distribute funds to whoever they deem, so that they can secure more votes and maintain their careers.


It just depends on your assumptions. 1) well-intended with great knowledge and incentives, 2) well-intended yet lacking knowledge and/or incentives, 3) not well-intended, and/or simply self-interested and rational in that sense.


(after reading the above, I'll answer your questions. I'm just providing some background info in relation to the general tone of your post.)

Yeh, hence I support the bailout; but I want it to come with a tonne of conditions (stripping the power away from individual politicians and giving it to people who actually know how to fix some of the issues rather than blather about the evils of austerity).

I dont know the details about the spanish one, but from the Greeks reaction I get the impression it wasnt strict enough.

[thegreekdog]

What kind of person pays for a car or holiday using a loan?

A car I can understand, but I don't think anyone pays for a holiday with a loan. That would be ridiculous.

Ever heard of a credit card?

Ever heard of America?

See, here in the United States, everyone deserves to have multiple automobiles, a large house, exotic vacations, and multiple big screen televisions. If they cannot pay for it with cash, they can pay for it with credit cards or mortgages. If they cannot pay the credit cards or mortgages, then they get bailed out. Because everyone should be equal. /rant.

[rdsrds2120]

What kind of person pays for a car or holiday using a loan?

A car I can understand, but I don't think anyone pays for a holiday with a loan. That would be ridiculous.

Ever heard of a credit card?

Ever heard of America?

See, here in the United States, everyone deserves to have multiple automobiles, a large house, exotic vacations, and multiple big screen televisions. If they cannot pay for it with cash, they can pay for it with credit cards or mortgages. If they cannot pay the credit cards or mortgages, then they get bailed out. Because everyone should be equal. /rant.

*raises hand*
Isn't the bolded idea perpetuated by capitalism and the need to consume, though?

-rd

[Frigidus]

Where's the part about us throwing the printed money into the black hole that is the banking industry? Oh wait, that doesn't fit into your narrative of the economy being a pile of shit because of poor people being greedy, never mind.

[WILLIAMS5232]

What kind of person pays for a car or holiday using a loan?

A car I can understand, but I don't think anyone pays for a holiday with a loan. That would be ridiculous.

Ever heard of a credit card?

Ever heard of America?

See, here in the United States, everyone deserves to have multiple automobiles, a large house, exotic vacations, and multiple big screen televisions. If they cannot pay for it with cash, they can pay for it with credit cards or mortgages. If they cannot pay the credit cards or mortgages, then they get bailed out. Because everyone should be equal. /rant.

*raises hand*
Isn't the bolded idea perpetuated by capitalism and the need to consume, though?

-rd

it's not the greedy capitalists fault that the idiot liberals enable the irresponsible people.

i know a guy who has defaulted 2 truck loans, a motorcycle loan and a PL.

this same guy lives in a 200,000 dollar house ( i'm aware that this is not a very expensive house, but i've seen houses on the market for 50k so yes, it is an expensive house ) his wife drives a new mercedes, he just bought about 20,000 dollars worth of furniture for said house ( on credit i'm sure ) he put an 8,000 dollar lift kit with rims and tires on a truck that he still owes 10,000 on, and him and his whole family wear all name brand clothing, and go out to eat several nights a week.

i'm sure his kids will apply for a student loan that they'll never pay off too.

this guy needs to be in jail.
drinking water, and eating rice and cheap fish 7 days a week
with nothing but a box fan and a sink and toilet.

i wonder how many more are like this.

[rdsrds2120]

What kind of person pays for a car or holiday using a loan?

A car I can understand, but I don't think anyone pays for a holiday with a loan. That would be ridiculous.

Ever heard of a credit card?

Ever heard of America?

See, here in the United States, everyone deserves to have multiple automobiles, a large house, exotic vacations, and multiple big screen televisions. If they cannot pay for it with cash, they can pay for it with credit cards or mortgages. If they cannot pay the credit cards or mortgages, then they get bailed out. Because everyone should be equal. /rant.

*raises hand*
Isn't the bolded idea perpetuated by capitalism and the need to consume, though?

-rd

it's not the greedy capitalists fault that the idiot liberals enable the irresponsible people.

i know a guy who has defaulted 2 truck loans, a motorcycle loan and a PL.

this same guy lives in a 200,000 dollar house ( i'm aware that this is not a very expensive house, but i've seen houses on the market for 50k so yes, it is an expensive house ) his wife drives a new mercedes, he just bought about 20,000 dollars worth of furniture for said house ( on credit i'm sure ) he put an 8,000 dollar lift kit with rims and tires on a truck that he still owes 10,000 on, and him and his whole family wear all name brand clothing, and go out to eat several nights a week.

i'm sure his kids will apply for a student loan that they'll never pay off too.

this guy needs to be in jail.
drinking water, and eating rice and cheap fish 7 days a week
with nothing but a box fan and a sink and toilet.

i wonder how many more are like this.

Didn't really need the rhetoric, but ok.

-rd

[WILLIAMS5232]

Didn't really need the rhetoric, but ok.

-rd

sorry, just trying to point out the whole system is out of whack.

and really other than just feeling good about themselves, the responsible people who take care of themselves, pay their debts, take responsibility for their own actions..etc.... get nothing.

not that i think they want anything, just they are tired of contributing to those that lean on others to get them out of a bind that they irresponsibly put themselves in.

and the govt supports these people because they vote, really, that shouldn't matter. if the govt would quit giving in to these people then they may not care to vote.

[Lootifer]

Didn't really need the rhetoric, but ok.

-rd

sorry, just trying to point out the whole system is out of whack.

and really other than just feeling good about themselves, the responsible people who take care of themselves, pay their debts, take responsibility for their own actions..etc.... get nothing.

not that i think they want anything, just they are tired of contributing to those that lean on others to get them out of a bind that they irresponsibly put themselves in.

and the govt supports these people because they vote, really, that shouldn't matter. if the govt would quit giving in to these people then they may not care to vote.

Yeh but dont think for a minute that the whole system is out of whack exclusively because theres some dumb people living beyond their means.

Sure theyre to blame; but so is the institution who blasted via every available outlet the message to these idiots that they NEED to consume to be a better human being, so are the institutions who gave the idiots credit in the first place at stupidly high interest rates (essentially exploiting the consumers ignorance and greed), and so is every ticket clipping middle man whos doing everything they can to ensure that the stupid man remains stupid and continues to mindlessly consume.

If you're gunna f*ck the idiot in the ass, I just ask that you f*ck the rest of the wankers who helped him get to where he is.

[huamulan]

'Wait, who exactly is lending out the money? Who authorizes these bailouts?

By EU, do you mean by unanimous decision from each EU member? If so, whose money is being lent out? Each government must take some of its reserves and lend them to Spain at some proportional amount?

I'm not talking about the politics of providing the bailout. Just saying that the bailout isn't money 'creation' - it's money pooled by EU member states (and maybe other nations in the case of the IMF, but I don't know).

they are tired of contributing to those that lean on others to get them out of a bind that they irresponsibly put themselves in.

Such as the banks and mortgage lenders who profited so greatly from the loosening of rules to such an extent that the 2008 crash was possible? Who took on toxic assets (such as Greek bonds or all the ridiculous mortgage in the USA) knowing that their government would jump in to save them.

Banks which still haven't cleaned up their act in the 4 years since the crash, seeing as the Spanish banking industry has just had to be bailed out.