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This is probably the worst time to be paying off old debts. I think that very shortly the courts are going to be so overwhelmed with debt cases that it’s going

This is probably the worst time to be paying off old debts. I think that very shortly the courts are going to be so overwhelmed with debt cases that it’s going to take years to clear the backlog. For people living paycheck to paycheck your basically judgement-proof anyway. As long as you pay your income tax you have noting to worry about. If you owe tax then it’s completely different story.

Spooky23 6y ago
Exactly. It’s a great time to be in debt, as inflation is gonna happen. Banks know it — Citi and Chase pretty much stopped cheap balance transfers in April for most customers.
- momokoko 6y ago
  Inflation had almost stopped for several years. We’re still below the fed mandate. Inflation encourages people to work as opposed to living off assets they already own.
  - birdyrooster 6y ago
    looks at the stock market, sees people thriving off of assets they already own during the pandemic Are you sure these people will be going back to work soon?
    - momokoko 6y ago
      Right. We need a lot more inflation. We need to devalue the dollar to make exports more competitive and rebuild the working class. Push the people making money off the stock market back into the workforce.
      - xyzzyz 6y ago
        Since for moderate levels of inflation (ie low double digits), stocks are inflation proof, if this actually improved competitiveness of American firms, moderate inflation would be a boon for stockholders. Big losers would be wage employers, who’d see their pay not catch up with growth of prices: this is in fact one of the core reasons we even target positive inflation in the first place, to counteract the effect of sticky wages that do not go down when necessary.
        cko 6y ago
        Low double digits is not considered moderate levels of inflation, if you're talking annually. In the 1970s in the US there were years of double digit inflation and real returns were negative. https://www.multpl.com/s-p-500-historical-prices/table/by-year https://www.multpl.com/s-p-500-historical-prices/table/by-ye...
  - fedreserved 6y ago
    The Fed has been fudging the inflation numbers since Moses was in short pants. Here's an explanation on how it's done. https://youtu.be/oP8nCMKJ3nI https://youtu.be/oP8nCMKJ3nI Long story short by making inflation appear lower then it is, the tax brackets have stayed lower then they otherwise would, costing tax payers an extra 130 billion over 10 years
    - dragonwriter 6y ago
      > The Fed has been fudging the inflation numbers since Moses was in short pants The Fed hasn’t been around that long, and isn’t even involved in inflation numbers, which come from the Bureau of Economic Analysis in the Department of Commerce.
  - Spooky23 6y ago
    The Fed mandate doesn’t matter. They need to keep pumping to stave off depression. Inflation or no, the banks are going to go bust without infusions of cash as retail folds up and securitized leases and leveraged commercial developers implode. I live in upstate NY, not exactly a boomtown... the economy is stabilized by government workers whose wage growth is 0-2% annually. The apartment that I rented in a nice suburban development for $550 in 2000 is $1150 in 2020 — well ahead of inflation. I see that pattern in many categories.
    - xyzzyz 6y ago
      Not only that, but with insane amounts of new government debt, inflation is the only way for government to bring it back under control.
      - mortehu 6y ago
        For some reason people[1] are willing to lock in 0.56% yield for 10 years currently, so people can't be expecting a huge amount of inflation. 1. of which a slight majority are private investors https://fiscal.treasury.gov/reports-statements/treasury-bulletin/current.html https://fiscal.treasury.gov/reports-statements/treasury-bull...
    - causality0 6y ago
      I wonder what the red flag is for "pull out your cash out of the bank and buy something tangible with it".
  - dragonwriter 6y ago
    > We’re still below the fed mandate. The Fed doesn't have a specific mandate for inflation levels, so it is impossible to be below it. The Fed mandate is to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates”.
  - justinmeiners 6y ago
    Those with a lot of assets tend to be able to find yields to offset inflation. Stocks and real estate tend to adjust with inflation regardless of yield. Inflation mostly encourages lower/middle class people to consume every dollar instead of saving for the future.
trhway 6y ago
> very shortly the courts are going to be so overwhelmed with debt cases that it’s going to take years to clear the backlog. In Santa Clara county 40K+ of possible evictions are coming.
scarface74 6y ago
It was similar during the last recession. I was underwater on my house and two other houses. With everyone else walking away it way the perfect time to do strategic defaults... 1. Rental property one - walked away. The bank sold it for $70K less than was owed. I payed $0 2. Rental property two - owed $130K. Did a short sale for $30K. I paid $1K 3. My own house. Walked away. It was sold for $70K less than I owed. They threaten to sue me. I told them that they could either sue me and I would file for bankruptcy or I could get 1/4 of what I owed from my 401K. They couldn’t touch my 401K in a lawsuit. 3 years to the day after the foreclosure, I got an FHA loan for 3.5% loan for a new house.
- site-packages1 6y ago
  This seems...morally questionable?
  - scarface74 6y ago
    Was it morally questionable when the same banks did predatory lending that went bad and got bail outs from the taxpayers? It’s a business transaction. Businesses default on loans and go bankrupt all of the time and it’s just part of doing business. Startups fail all of the time and lose investor money and can come right back to the trough. That’s like businesses that say “we are family and we are in this together and we need to make a shared sacrifice” while they walk away with golden parachutes and leave the employees with nothing. Heck we elected a president that filed for bankruptcy 4 times. Businesses love to talk about morality as long as it benefits them. My last company had a budget shortfall because of Covid and trotted out the “we are family” schtick along with a 10% pay cut. The same day of the announcement I was looking for another job. 3 years later when I did get another loan, the banks saw my foreclosures and short sales and were more than happy to give me a mortgage that was 50% more than my prior one. It was just business to them too.
    - opo 6y ago
      >...3 years later when I did get another loan, the banks saw my foreclosures and short sales and were more than happy to give me a mortgage that was 50% more than my prior one. It was just business to them too. FHA loans are guaranteed by the the federal government. During the next recession if you default on this loan because you no longer want to pay the loan, it will be the rest of us taking the loss, not the bank. So, not very surprising that the bank was willing to give you the loan.

Spooky23 6y ago

Exactly. It’s a great time to be in debt, as inflation is gonna happen. Banks know it — Citi and Chase pretty much stopped cheap balance transfers in April for most customers.

momokoko 6y ago
Inflation had almost stopped for several years. We’re still below the fed mandate. Inflation encourages people to work as opposed to living off assets they already own.
- birdyrooster 6y ago
  looks at the stock market, sees people thriving off of assets they already own during the pandemic Are you sure these people will be going back to work soon?
  - momokoko 6y ago
    Right. We need a lot more inflation. We need to devalue the dollar to make exports more competitive and rebuild the working class. Push the people making money off the stock market back into the workforce.
    - xyzzyz 6y ago
      Since for moderate levels of inflation (ie low double digits), stocks are inflation proof, if this actually improved competitiveness of American firms, moderate inflation would be a boon for stockholders. Big losers would be wage employers, who’d see their pay not catch up with growth of prices: this is in fact one of the core reasons we even target positive inflation in the first place, to counteract the effect of sticky wages that do not go down when necessary.
      - cko 6y ago
        Low double digits is not considered moderate levels of inflation, if you're talking annually. In the 1970s in the US there were years of double digit inflation and real returns were negative. https://www.multpl.com/s-p-500-historical-prices/table/by-year https://www.multpl.com/s-p-500-historical-prices/table/by-ye...
- fedreserved 6y ago
  The Fed has been fudging the inflation numbers since Moses was in short pants. Here's an explanation on how it's done. https://youtu.be/oP8nCMKJ3nI https://youtu.be/oP8nCMKJ3nI Long story short by making inflation appear lower then it is, the tax brackets have stayed lower then they otherwise would, costing tax payers an extra 130 billion over 10 years
  - dragonwriter 6y ago
    > The Fed has been fudging the inflation numbers since Moses was in short pants The Fed hasn’t been around that long, and isn’t even involved in inflation numbers, which come from the Bureau of Economic Analysis in the Department of Commerce.
- Spooky23 6y ago
  The Fed mandate doesn’t matter. They need to keep pumping to stave off depression. Inflation or no, the banks are going to go bust without infusions of cash as retail folds up and securitized leases and leveraged commercial developers implode. I live in upstate NY, not exactly a boomtown... the economy is stabilized by government workers whose wage growth is 0-2% annually. The apartment that I rented in a nice suburban development for $550 in 2000 is $1150 in 2020 — well ahead of inflation. I see that pattern in many categories.
  - xyzzyz 6y ago
    Not only that, but with insane amounts of new government debt, inflation is the only way for government to bring it back under control.
    - mortehu 6y ago
      For some reason people[1] are willing to lock in 0.56% yield for 10 years currently, so people can't be expecting a huge amount of inflation. 1. of which a slight majority are private investors https://fiscal.treasury.gov/reports-statements/treasury-bulletin/current.html https://fiscal.treasury.gov/reports-statements/treasury-bull...
  - causality0 6y ago
    I wonder what the red flag is for "pull out your cash out of the bank and buy something tangible with it".
- dragonwriter 6y ago
  > We’re still below the fed mandate. The Fed doesn't have a specific mandate for inflation levels, so it is impossible to be below it. The Fed mandate is to “promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates”.
- justinmeiners 6y ago
  Those with a lot of assets tend to be able to find yields to offset inflation. Stocks and real estate tend to adjust with inflation regardless of yield. Inflation mostly encourages lower/middle class people to consume every dollar instead of saving for the future.

trhway 6y ago

> very shortly the courts are going to be so overwhelmed with debt cases that it’s going to take years to clear the backlog. In Santa Clara county 40K+ of possible evictions are coming.

scarface74 6y ago

It was similar during the last recession. I was underwater on my house and two other houses. With everyone else walking away it way the perfect time to do strategic defaults... 1. Rental property one - walked away. The bank sold it for $70K less than was owed. I payed $0 2. Rental property two - owed $130K. Did a short sale for $30K. I paid $1K 3. My own house. Walked away. It was sold for $70K less than I owed. They threaten to sue me. I told them that they could either sue me and I would file for bankruptcy or I could get 1/4 of what I owed from my 401K. They couldn’t touch my 401K in a lawsuit. 3 years to the day after the foreclosure, I got an FHA loan for 3.5% loan for a new house.

site-packages1 6y ago
This seems...morally questionable?
- scarface74 6y ago
  Was it morally questionable when the same banks did predatory lending that went bad and got bail outs from the taxpayers? It’s a business transaction. Businesses default on loans and go bankrupt all of the time and it’s just part of doing business. Startups fail all of the time and lose investor money and can come right back to the trough. That’s like businesses that say “we are family and we are in this together and we need to make a shared sacrifice” while they walk away with golden parachutes and leave the employees with nothing. Heck we elected a president that filed for bankruptcy 4 times. Businesses love to talk about morality as long as it benefits them. My last company had a budget shortfall because of Covid and trotted out the “we are family” schtick along with a 10% pay cut. The same day of the announcement I was looking for another job. 3 years later when I did get another loan, the banks saw my foreclosures and short sales and were more than happy to give me a mortgage that was 50% more than my prior one. It was just business to them too.
  - opo 6y ago
    >...3 years later when I did get another loan, the banks saw my foreclosures and short sales and were more than happy to give me a mortgage that was 50% more than my prior one. It was just business to them too. FHA loans are guaranteed by the the federal government. During the next recession if you default on this loan because you no longer want to pay the loan, it will be the rest of us taking the loss, not the bank. So, not very surprising that the bank was willing to give you the loan.