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>The majority of debt that people outside of the 1% are likely to hold is probably mortgage debt This is a demonstrably false statement [0] The bottom 50% hold

by RC_ITR 5y ago

>The majority of debt that people outside of the 1% are likely to hold is probably mortgage debt This is a demonstrably false statement [0] The bottom 50% hold 57% of the outstanding credit debt. [1] The bottom 50% hold 33% of all other liabilities. I don't know how to make it more clear to you that the average balance sheet of the bottom 50% is no assets, many liabilities. Sorry if the full stop hurt your feelings. [0]https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:127;series:Consumer%20credit;demographic:networth;population:all;units:shares https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... [1] https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/#quarter:127;series:Other%20liabilities;demographic:networth;population:all;units:shares https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... EDIT: Again as a reminder, mortgages aren't 'net debt.' when they are less than the house's worth.

jbay808 5y ago
> I don't know how to make it more clear to you that the average balance sheet of the bottom 50% is no assets, many liabilities. ... Yes? Again, I think we agree on this fact. You're stating a lot of facts as though they were things that I argued against, when in fact, they support my thesis. > The bottom 50% hold 57% of the outstanding credit debt But that wasn't what I was disagreeing with. Your link also states that the bottom 50% hold only 32% of all liabilities. While the bottom 50% does have most of the credit debt (which I agreed with), a much larger overall liability is mortgage debt (2.6x larger), which they have very little of (22.5%). You say mortgages aren't "net debt" but that seems hardly relevant to the question of whether someone benefits or loses from inflation, because their debt is fixed while their assets float. Edit: maybe you think that I'm arguing that affluent individuals have negative net worth? I'm certainly not saying that. I'm saying that they have a large quantity of mostly fixed-rate debts, backed by an even larger quantity of assets that appreciate with inflation.
- RC_ITR 5y ago
  Again, I can't emphasize this enough, the bottom 50% holds 32% of liabilities and nearly 100% of NET liabilities. We just are clearly at an impasse on that though. You can sell a house to pay off a mortgage so it's not harmful debt because it is OFFSET BY ASSETS THAT ALSO INFLATE (In fact, the brief period where that wasn't true caused the largest financial crisis of our lifetimes). What do you sell to pay off credit card loans/student loans/etc.?
jbay808 5y ago
(Further response just to clarify): by "the wealthier contingent outside the 1%", I am of course referring to the 50% to 99% percentile, who do collectively hold almost three-quarters of all mortgage debt, and that mortgage debt also comprises the vast majority of their debt.
naveen99 5y ago
You are ignoring their largest asset, which is their future labor / income.

by RC_ITR 5y ago

jbay808 5y ago

> I don't know how to make it more clear to you that the average balance sheet of the bottom 50% is no assets, many liabilities. ... Yes? Again, I think we agree on this fact. You're stating a lot of facts as though they were things that I argued against, when in fact, they support my thesis. > The bottom 50% hold 57% of the outstanding credit debt But that wasn't what I was disagreeing with. Your link also states that the bottom 50% hold only 32% of all liabilities. While the bottom 50% does have most of the credit debt (which I agreed with), a much larger overall liability is mortgage debt (2.6x larger), which they have very little of (22.5%). You say mortgages aren't "net debt" but that seems hardly relevant to the question of whether someone benefits or loses from inflation, because their debt is fixed while their assets float. Edit: maybe you think that I'm arguing that affluent individuals have negative net worth? I'm certainly not saying that. I'm saying that they have a large quantity of mostly fixed-rate debts, backed by an even larger quantity of assets that appreciate with inflation.

RC_ITR 5y ago
Again, I can't emphasize this enough, the bottom 50% holds 32% of liabilities and nearly 100% of NET liabilities. We just are clearly at an impasse on that though. You can sell a house to pay off a mortgage so it's not harmful debt because it is OFFSET BY ASSETS THAT ALSO INFLATE (In fact, the brief period where that wasn't true caused the largest financial crisis of our lifetimes). What do you sell to pay off credit card loans/student loans/etc.?

jbay808 5y ago

(Further response just to clarify): by "the wealthier contingent outside the 1%", I am of course referring to the 50% to 99% percentile, who do collectively hold almost three-quarters of all mortgage debt, and that mortgage debt also comprises the vast majority of their debt.

naveen99 5y ago

You are ignoring their largest asset, which is their future labor / income.