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The financial system as we know it was new in the mid seventies. By the middle eighties the only tool that was really being aggressively employed to deter borrowing was high interest rates in every sector of the economy. However, this caused the failure of many otherwise viable business. They soon learned that instead of high rates they needed to create a borrowing qualification system based on credit ratings along with other lending policy in order to disqualify some buyers, therefore reducing inflation from excessive demand, while at the same time slowly lowering interest rates and the overall availability of borrowed capital for purchases. There is a whole toolbox of qualifying financial ratio criteria they can deploy against you to stagnate market demand by borrowers if the cost of production turns upside down.
 

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Went thru the 80’s farming, wouldn’t wish that on anyone but I see nothing wrong with mortgage rates in the 5%-6% range. These operators that they can buy, buy buy with 2% money and just pay interest needs to come to a stop, all it’s doing now is pushing land and rent values up. It’s soon time to pop the bubble and face the consequences.
 

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First thing is to stop with words like "can't" or "won't" because you are talking as if some sort of actual limit exists to stop something from occurring. There is no such restriction so don't think that way.

The currency I earn has been devalued a minimum of 5% over the last year. Probably much more in some areas. It looks like the Fed expanded the currency supply by about 40% over the last year so in reality there is a lot of devaluation going on.

So, I am loosing 5% purchasing power but I can get a 10 year GIC from Royal Bank that will pay me 2% right now.

Think about that when you say "can't" or "won't".

There have been actual loans made around the world at 0% and even negative interest rates. Tell me how that is possible in a capitalist world where supply and demand rules and all things must follow sound economic reality without screwing up the system we operate under.

Let's see, I am loosing 5% a year in my currency and so I will tuck it away at 2% for the privilege of having currency. If you want to talk about something that "can't" or "won't" happen then there is a pretty darn good example. Because, yeah, the smartest option is to take a - 3% return on an investment. And apparently all the "smart" money does this because bonds are bought by the $Billions to accomplish this amazing bit of investing.

It used to be a loan would be at a higher interest rate than inflation. Which makes sense. Why would you lend money on a loosing proposition. There is risk as it is in lending so why would you also take on a guaranteed loss by lending at a lower rate than inflation. Short answer is you won't. Your lending business would even say you can't.

Yet that is exactly how the world is operating.

So when you say something "can't" or "won't" happen, you sure better understand what is actually happening right now. Because that shows exactly that your thinking is invalid. And therefore taking a position on what will happen is also impossible.
 

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It used to be a loan would be at a higher interest rate than inflation. Which makes sense. Why would you lend money on a loosing proposition. There is risk as it is in lending so why would you also take on a guaranteed loss by lending at a lower rate than inflation. Short answer is you won't. Your lending business would even say you can't.
Someone rear ended and I'm guessing will ultimately total my wife's vehicle on Saturday. Now we're in need of a vehicle fairly urgently.

I was going to pay cash for one, but they're willing to finance at around 3% maybe under. It feels pretty bad to be spending the cash I have sitting around when they'll give me a loan for less than inflation..
 

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Many dealers will actually give you a better deal if you finance vs pay cash right now. Due to the kick back they get, even if you only finance a small portion for a short time. That’s fckd.
 

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This crap has been going on for a while. Bought a used car back in around 2011 and it was the same situation. Had ability to pay cash and figured a dealership would profit off quick payment so get a few $ off. Nope. My best deal was to get a loan through their financial partner which was TD who I don't even deal with. Had to finance for minimum of 6 months. So that's what I did, then paid off the loan after 7 months.

Banks are in control of everything. When a car dealer can sell a vehicle cheaper by selling a loan with it than selling for straight up cash, then you understand this is true. This is not how free markets work.

As for paying cash vs getting the loan Primer, I don't know. Personally, I see part of the game and manipulation being done so I chose not to play. The system is set up to get you in debt and keeps telling you debt is good. The way things like land and machinery are going up in price is showing you that debt is good, the smart man is the one who keeps adding more debt. This is true, and I won't argue that. The evidence is all around.

But what is also true is debt is not wealth and it is not real money, and the ultimate truth is a person is wealthy who has no debt. When you start doing crap like depreciation and net worth and calculating your value of deprecated assets vs debt and all that, then you are functioning in a world of financialization and basically fiction. Fiction because that net worth of the land you own measured in $ is always changing. The land as an asset never changes. One value is real, one is abstract.

So, if the ultimate goal is to own assets and no debt then I would say that should guide a person. While you can be getting rich taking on debt right now and watching your last purchase from a year ago rise in $ value, the truth is it's value as an owned asset has not changed much. It's still a physical asset. So what you are talking about with more debt as winning some kind of game is that at any moment in time you need to take an accounting of the $$$ you have vs the debt. And whether or not you are ahead can change at any point in time. It's all a matter of when you cash out. Though those exact things measured as assets never change. A combine is the same combine next year as this year, even if units of $$s that you measure it has now gone up 20%. It's still the same combine.

So, ultimately debt is what you don't want. You want assets. And you can be earning more $$s right now with more debt. And that is true today, perhaps next month also. Maybe next year, but then maybe not next year. That is the problem with measuring in $$ is you don't know exactly what next year will bring.

One sure fire way to reign in inflation is call in a bunch of debt. Yeah, sure. It "can't" happen and so "won't" happen. Sure, it has happened before. But "won't" happen this time. The banks know better.

So as a point of reference, these banks who "won't" do something have paid $333B in fines since 2000. Yes, billion. Name a business that is simply in existence to create a profit just like a company who builds chairs that can pay $1B in fines, and carry on as normal. If I am on a jobsite and create a $10M oil spill I am sure my business won't last the legal issues and could very well be jail for people involved. But a bank paying $20B in fines is just business as usual.

These are the businesses who decide whether your debt wont be or can't be called in, like in the 1980s. Because it would cause too much damage. Yes, these banks are there to ensure you are protected and have your best interests at heart.

Personally I like no debt, because I feel better knowing someone Is less likely to pull the rug out from under me in 6 months.


 

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But what is also true is debt is not wealth and it is not real money, and the ultimate truth is a person is wealthy who has no debt.
Money of any kind is only as real as others put value on it, and place a demand for it. Strangely enough, debt as currency has value these days, and so debt-based money is as real as anything else. For now.
So, ultimately debt is what you don't want. You want assets.
Except we now live in a world where debt is an asset. It's bought and sold like any other commodity (usually with another form of debt as currency). What a bizarre world we live in.

Also assets can be still be liabilities as well. On paper our land holdings make personal and corporate assets appear to be on the order of millions of dollars. Yet that asset value is useless to fund the actual operation of farming, other than to provide a place to actually farm. Farms may be various kinds of corporations but they cannot be treated the same as non-farming corporations. Wish politicians would learn and remember that (and who feeds them).
 

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That's all true TorrieM, it is a bizarre world. And we have been programmed to think that our bizarre world is actually the normal and right way to operate things and so conduct our lives accordingly. As of today people are working on the assumption that interest rates can't go higher and therefore beleive the rates won't go higher. More precisely - that interest rates and the entire financial world will be controlled with an even heavier hand.

Think about what you are asking for. Are you a free market entrepreneur or do you demand yourself be kept as a servant of a communist or other authoritarian regime. Because that is how interest rates are kept low. Free markets don't exist when keeping interest rates down. It is all done with manipulation and by the designs of a small group of people totally unaccountable to you. You just live by their decisions.

And while interest rates are forced down by such means to "help everyone", you are seeing free markets removed from a key part of your existence and anyone with savings are having those savings destroyed. To the point of putting whatever they have into stock markets or other parts of a financialized world to avoid never ending erosion of those savings. Because having savings is now what stupid people do. The smart people need to put their life's labours into something like stock market speculation in order to keep ahead.

It truly is concerning to assess how many people are hoping, betting, or praying that interest rates continue to be low. Do the same people actually understand what they are really supporting. As I mention in other threads - if you lived under the rule of an authoritarian regime, would you even recognize it. Or even on a more basic level - do you understand central planning and do you know when the central planners have it right or wrong.
 

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to provide a place to actually farm.
From past history this high land cost was not a problem because most guys wanted out of farming back in the 70s,80s and early 90s. That is how I got started in farming. I heard early 2000s guys rented there land taxes.
The big move up was 2007 and onwards when farming was profitable again and the push for expansion increased greatly. For new guys coming into the business now it will be a tough time servicing debt if rates go up and our commodities settle down.
I was thinking the other day, these grain prices are great and our balance sheets should be decent, but there are a lot of wage earners who work at jobs with no possible chance they will get a high pay raise to help there families out with food costs. This cant end well if it keeps going up like this! I Would rather see a bit of commodity softening across the board so people can catch up.
 

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Grain pricing been too low for sometime. It just catching up to where it should be. Don’t forget you need to get payed too.
50-60k for a farmer personal wages is not high at all. Hell most of my city friends make well over 150k and combine wages over 250k. Don’t sale yourself short.
I heard the other day that bison transport is paying 150k for a long distance driver.
 

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Grain pricing been too low for sometime. It just catching up to where it should be. Don’t forget you need to get payed too.
50-60k for a farmer personal wages is not high at all. Hell most of my city friends make well over 150k and combine wages over 250k. Don’t sale yourself short.
I heard the other day that bison transport is paying 150k for a long distance driver.
That’s great but don’t help when Imputs have tripled. Not really much farther ahead
 
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No, that can't be right Meritmat. Pretty sure we have been told repeatedly by every expert to be put in public that you can infact inflate your way out of debt. That is actually the main reason people will say interest rates will be kept low - it will erase existing debt.

What your radical crackpot ideas are saying is that high inflation means costs go higher and so anything relying on debt expansion to keep going will simply get further behind. That would mean government. So you can't inflate your way out of debt when you keep expanding debt because of inflation.

I mean, if a guy talks crazy like that then you may as throw out some wild idea like you would have to cut spending to reduce debt expansion. Then you could inflate your way out of debt. But then I might simply say that if reducing debt expansion is the solution, then wouldn't that apply during non inflationary conditions just the same as inflationary. And if that were true, things are pretty much a wash in either situation except those with savings don't see their saving eliminated if inflation isn't engineered in.

So, if you can't actually inflate your way out of debt, is it safe to say that high inflation basically only accomplishes destroying savings and making the poor even poorer since they don't have any assets that get adjusted to inflation.

But, I am sure somewhere there is an expert that understands this.

It will be interesting to see if the velocity of money keeps slowing. High prices always cure high prices so when that reality hits home we will add a new dimension to what "can't" and "won't" happen. Hopefully another crisis will come along that will require massive injections to keep things going. Two in 14 years so far, the 3rd should be qued up already.
 

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Then you are a conspiracy nut too Slip Clutch. Because I talk all this nonsense of how governments can't actually inflate their way out of debt where as even the Federal Reserve who are the foremost experts are the one creating high inflation. It is in their mandate to create 2% inflation. And government who gives the Fed their mandate is on board with it too. Which means I am pretty much alone in a sea of experts in my contrarian view. Which puts my thinking as pure conspiracy talk.

Oh well. Maybe our government will solve the problem of the shrinking middle class and poor getting poorer by ever increasing the government control. It hasn't worked yet, and there is no signs of it ever working. But we are told it will. I am pretty I can solve those problems though. But then again, that could just be the tinfoil messing with my brain.

As for the comment on climate change agenda. Yes, that is a key role. It's multifaceted but one facet is the ability for government to expand debt via those initiatives.

Step 1
Create Great Financial Crisis to drop interest rates and con the peasants into taking on massive debt. When debt saturation is max move to Step 2.

Step 2
Create plandemic to roll out basic income supplement therefore giving money directly to peasants to spend as debt has maxed out. Debt slaves are also less likely to risk job loss so won't stand up to an authoritarian regime because, well, they are debt slaves and need to pay their obligations. Move on to Step 3.

Step 3
Personal debt is maxed out. Basic income supplement already trailed. Need to expand debt expansion further so government will work directly with corporations on green investments and infrastructure. Reference Build Back Better, that was baked in the cake many years ago.

Step 3 doesn't solve the velocity of money problem so we may see another crisis as an excuse to pump more money into the hands of the debt slaves. But they may just forgo this and move right past by saying it no longer matters what the peasants do because governments will simply assume full control of the economy via partnerships with corporations. The peasants serve the new structure rather than the daily lives of the peasants creating the structure. The new system is also known previously as fascism.
 

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The **** ton of stimulus money that’s been pumped into the economy is reason for recent pumping of the gas on inflation.
It’s funny the suggestion that higher interest rates leads to “increased saving”! When the general population is drunk on credit and buying cheap Chinese ****. All the sudden this same cult will be savers!
I’ll take low interest/strong economy, stock market over the alternative all day.
The free stimulus money is the antichrist though.
 

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It is in their mandate to create 2% inflation. And government who gives the Fed their mandate is on board with it too.
Of course. Now the Fed is a slightly different than in most countries where the central bank is simply a branch of the government. The Fed is partly private. But in all cases, inflation goals (greater than 0) are deliberate government policy. This allows governments to spend without having to raise taxes. It also makes government debt cheaper to pay down (even though they never do quite do it). It also allows for the money supply to match economic growth. If they wanted to, they could certainly halt inflation.
 
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