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The issue of liquidity is important. One aspect that affects all of us is the borrowing of money. The easy borrowing of money drives the price up for that whi

The issue of liquidity is important. One aspect that affects all of us is the borrowing of money. The easy borrowing of money drives the price up for that which it is borrowed. Housing would be more affordable if one needed to save a greater portion of the purchase price. Being able to borrow hundreds of thousands of dollars causes an artificial bidding war. The same happened with education. When it became possible to borrow for education, the prices for education rose as well. This also degraded the quality of education in many fields, as the barrier to entry (not finances!) was removed. Institutions enrolled students in many worthless classes only for the income stream. This affects the poor because the price of everything is inflated through borrowing and debt (even the extra few percent the merchants charge to cover credit card fees). I've never taken out a loan in my life, and I am comfortably liquid. But my liquidity is always eaten away when someone borrows beyond their means. Note that I am not against borrowing, and see the value of it in certain circumstances. But when borrowing is easy for the consumer, and consequences for borrowing are removed, it affects all of us.

alnayyir 16y ago
Agreed on all points. US domestic policy does not encourage fiscal responsibility at a personal level and subsidizes a lot of functionally useless activity.
mitko 16y ago
I agree with you that borrowing when needed is good, but excessive borrowing can create crisis. Karl Marx did foresee this: Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism. Karl Marx, Das Kapital, 1867 Another citation here: http://www.theatlantic.com/business/archive/2009/01/faux-marx/4565/ http://www.theatlantic.com/business/archive/2009/01/faux-mar... Edit: markup
- alnayyir 16y ago
  He never said that. From your link: " Laura of 11D says this quote is making the rounds of Wall Street. ... And indeed, searching all three volumes for "houses" and "homes", which are a pretty straight one-to-one translation, yields nothing that sounds remotely like this. Every time I see one of these things, I wonder. Who the hell makes them up? And why? What do you get from passing your mediocre musings off as the work of a long-dead revolutionary?"
  - hughw 16y ago
    Good for you alnayyir. I also doubt in 1867 "buy[ing] more...technology" was a concern. Sign of a good Snopes target.
    - brazzy 16y ago
      Yeah, because technology did not exist before the internet... The word may not have been used that way back then, but the 1867 equivalent of an expensive smartphone bought as a status symbol rather than for its actual utility would have been a pocket watch.
      - alnayyir 16y ago
        They didn't speak like that back then, and mass consumption of technology wasn't a concept yet. Pocket watches weren't a mass consumption item at the time, nor would they have been considered technology.
  - brazzy 16y ago
    The motivation behind that particular faux quote is probably to support the "Obama = Evil Communist" notion.
  - kahirsch 16y ago
    This quote apparently came from this satire: http://www.newsmutiny.com/pages/Communist_Reeducation.html http://www.newsmutiny.com/pages/Communist_Reeducation.html
runT1ME 16y ago
You make an interesting point about borrowing, but anther one to consider is the fact that borrowing (loans) can cause macro inflation. The problem with inflation is it hurts the poor the most, and helps the rich. Anyone who owns assets, and especially income producing assets benefits from inflation. It's the rich who own companies, land, commodities, real estate, all things that raise in price when inflation occurs. However, the poor family who owns nothing, rents, and lives paycheck to paycheck deals with the rise in prices by simply going further into debt.

alnayyir 16y ago

Agreed on all points. US domestic policy does not encourage fiscal responsibility at a personal level and subsidizes a lot of functionally useless activity.

mitko 16y ago

I agree with you that borrowing when needed is good, but excessive borrowing can create crisis. Karl Marx did foresee this: Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalised, and the State will have to take the road which will eventually lead to communism. Karl Marx, Das Kapital, 1867 Another citation here: http://www.theatlantic.com/business/archive/2009/01/faux-marx/4565/ http://www.theatlantic.com/business/archive/2009/01/faux-mar... Edit: markup

alnayyir 16y ago
He never said that. From your link: " Laura of 11D says this quote is making the rounds of Wall Street. ... And indeed, searching all three volumes for "houses" and "homes", which are a pretty straight one-to-one translation, yields nothing that sounds remotely like this. Every time I see one of these things, I wonder. Who the hell makes them up? And why? What do you get from passing your mediocre musings off as the work of a long-dead revolutionary?"
- hughw 16y ago
  Good for you alnayyir. I also doubt in 1867 "buy[ing] more...technology" was a concern. Sign of a good Snopes target.
  - brazzy 16y ago
    Yeah, because technology did not exist before the internet... The word may not have been used that way back then, but the 1867 equivalent of an expensive smartphone bought as a status symbol rather than for its actual utility would have been a pocket watch.
    - alnayyir 16y ago
      They didn't speak like that back then, and mass consumption of technology wasn't a concept yet. Pocket watches weren't a mass consumption item at the time, nor would they have been considered technology.
- brazzy 16y ago
  The motivation behind that particular faux quote is probably to support the "Obama = Evil Communist" notion.
- kahirsch 16y ago
  This quote apparently came from this satire: http://www.newsmutiny.com/pages/Communist_Reeducation.html http://www.newsmutiny.com/pages/Communist_Reeducation.html

runT1ME 16y ago

You make an interesting point about borrowing, but anther one to consider is the fact that borrowing (loans) can cause macro inflation. The problem with inflation is it hurts the poor the most, and helps the rich. Anyone who owns assets, and especially income producing assets benefits from inflation. It's the rich who own companies, land, commodities, real estate, all things that raise in price when inflation occurs. However, the poor family who owns nothing, rents, and lives paycheck to paycheck deals with the rise in prices by simply going further into debt.