Top 10 Ridiculous Examples of Corporate Greed

[CultureCitizen]

And the Fed is actually a mixed entity partly private and partly public, which might just be the worst of both worlds.

I'm not sure how you would conclude that. There is nothing private about it's operation. It's controlled by congress for everything.

The only thing having private investors does, is bring capital into it's operations, which of course requires dividends. What exactly is the downside?

It's a cultural organization issue. I find it hard to believe that investors have absolutely no inffluence in the Federal reseve banks. I find it hard to believe.

Inside the New York Fed: Secret Recordings and a Culture Clash

 

[CultureCitizen]

Thousands of major companies operate debt free.

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

 

[Andylusion]

Again, the fact society has used credit, doesn't mean it can't exist without credit.

How about Facebook. Apple computer never used any debt of any kind, until Steve Jobs died.

Qualcoimm, also never used debt until about 2013. Chipotle, Panera, even Buffalo Wild Wings, all have been operating debt free to the present day.

Thousands of major companies operate debt free.

The banks didn't allocate resources in the wrong sector. Investors choose where to allocate resources. They demanded the investments they got. Moreover, the investors didn't allocate resources in the wrong sector either. They knew the government, operating on left-wing principals would bail them out, under the guise of "saving the economy from a great depression".

Pretend I'm an investor, and you are the government. If I know for a fact, that you are so stupid, that if a bad investment, that you'll bail me out.... am I the one allocating to the wrong sector?

No, I'm not. I'm allocating my investments in the best possible place.

If the investment works out, I get all my money back plus massive interest.

If the investment doesn't work out, you government morons will bail me out and I'll get all my money back.

My investments are the best possible results for me. I invested brilliantly. The only 'wrong' was the idiots in government who made my investments brilliant, by guaranteeing them in the name of "preventing a great depression".

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

This is a well known issue. Most of the money paid back, came from other government programs.

Baloney.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

They paid back over $200 billion, a portion of $4 billion doesn't mean you can say "Most of the money paid back, came from other government programs" Unless you use liberal bad math.

If the banks actually paid back all the money, then how the heck did the national debt double?

Because Obama spends like a drunken sailor.

He got all the money back, and still managed to have a trillion dollar deficit?

Yes.

Then you are not reading what I am reading. According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

You seem to have locked onto one example, and assumed no other example exists. The point of that $4 Billion program, being used to pay back government bailouts, was that if they are using that program... a program supposedly that earmarked those funds for small business loans... to pay back bailouts... then obviously they are likely using other programs the same way, which is exactly what the GAO shows.

According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

Well, if you want to say that the biggest banks repaid over $200 billion in TARP funding while tiny banks, making up more than 40% of TARP banks, repaid about $2 billion in TARP loans with other loan money, I won't argue with that.

You'd still have to admit your claim that "most of the money paid back came from other government programs", because $2 billion is not most of over $200 billion.

I'm still not getting where you think it's limited to $2 Billion. In fact most of the reports I've read say it's impossible to know exactly how much money from the dozens of government programs, grants and subsidies the government is giving out, was used to repay TARP.

I mean given that all these banks supposedly reported budget losses, and yet were able to pay back the bailout in under 3 years? Where the heck did they have all this spare cash laying around to pay back TARP if they were losing money?

Citigroup recorded a lost of $20 billion in 2009 and $10 billion in 2010, but somehow paid back billions in TARP money in 2010? How? From what?

It makes sense if they were simply using other government programs and special loans to pay back TARP. If not, then I find it difficult to believe your assertion that is was only $2 Billion used to pay back hundreds of billions.

 

[Andylusion]

IBM grew to be the biggest most profitable company in history without debt

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

The implication of your statement is "because everyone uses them, they must be required".

Again, every time you say "well everyone uses debt".... you are making an implied statement that debt is required. I don't care if it's common. That doesn't mean it's required or needed.

The fact that I am living proof that you can survive without any debt, shows my claim to be true. And while it's easy to point to myself, there are many others who have done exactly the same, and made massively profitable companies without debt.

You don't even realize just how many people choose to have a mortgage, not because it is needed, but rather because they have been convinced they are saving money on taxes, by getting the mortgage interest deduction. I actually met a lady who purchase a camper....... a CAMPER.... with a mortgage intentionally, because she wanted a tax deduction. That is mindlessly stupid. Borrow tens of thousands, to pay the bank thousands in interest, on a camper that drops in value like a 50 ton weight in the middle of the ocean, in order to save a few bucks in taxes?

I am not disregarding the ability to create growth with borrowed money. Of course you can. But along with that comes the crash and bankruptcy when the economy tanks, and you can't pay your debt service.

In the early to mid 1990s, Apple computer actually had negative operating revenue. They were losing money, year over year. They didn't declare bankruptcy, and restructure. Didn't have to. They didn't have any debt.

Equally I was working for a company, where during the corporate meeting, they projected a slide showing they had used up $950,000 of a line of credit with the bank. I said right then, that if they didn't pay down their debt, as soon as the first customer canceled an order, we would all be laid off instantly, because the company simply had too much debt. Everyone blew me off, said I didn't understand how credit allowed the company to grow. Sure enough one customer canceled an order, and the entire production department with only 2 exceptions (out of about 20 people) was laid off in under a week.

You know as much as the left-wing supports Warren Buffet, it's amazing no one on the left, listens to what he actually says. You hear what you like, and pretend he never says anything else.

10 Best Money Tips From Warren Buffett of All Time | GOBankingRates

Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest the way many Americans in debt do. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” Buffett said in a 1991 speech at Notre Dame. “You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”

Buffett is especially wary of credit cards. His advice is to avoid them altogether. “Interest rates are very high on credit cards,” Buffett once said in a news release. “Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke.”

Another key to ensuring security is to always keep cash reserves on hand. “We always maintain at least $20 billion — and usually far more — in cash equivalents,” Buffett said in the 2014 Berkshire Hathaway annual report. Buffett credits these reserves with helping Berkshire Hathaway stay afloat throughout the Great Recession, even as so many other businesses floundered.

Businesses and individuals alike might get an itch to put liquid cash to work through investments. “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” Buffett said. “When bills come due, only cash is legal tender,” he continued. “Don’t leave home without it.”
​

So even that know-nothing self-made multi-billionaire Warren Buffet, well know Democrat, says openly, Debt is bad. Have cash. Pay with cash. Have cash in the bank. Get rid of credit. Have interest work for you, instead of working for the banks.

*shrug* How much clearer can it get?

 

[Toddsterpatriot]

I disagree with you on several levels:
1. Banks did made a bad investment by giving predatory loans to both ninjas or people with low income.
Indeed, they were bailed out. As far as I know banks paid back, that would at least make them even regarding the bailout.


While you might think you are allocating your investment in the best possible way. That doesn't mean it is being allocated in the best possible way for the system as a whole: this seems to be the viewpoint of both Austrians an Libertarians, but I disagree. The simplest case is investing in a bubbling asset or in a market where there is little competition, while many people are able to make a profit from them, many more are harmed on the way.

At some point of history child labour was seen as a good thing. How could it not be good? We have a child who lives in poverty and we are offering him a way to be better off. Ah , true he gets paid less than an adult, and he will probably not be able to get any education because he is working.
Sometimes the best choice offered by the market are not necessarilly the best choices for a society as a whole.

You mean the loans that the federal government was actively suing them to make?
And by the way, the biggest bailouts of the entire recession were Freddie and Fannie. You know, the government owned banks?

Banks paid back bailout money, with other bail out money.
Banks Repaid Fed Bailout With Other Fed Money: Government Report
This is a well known issue. Most of the money paid back, came from other government programs.

This wacky idea that somehow banks paid back all the money, is ridiculous. Use your brain. If the banks actually paid back all the money, then how the heck did the national debt double? The left wing likes to claim that the only reason Obama had all these $1.3 Trillion dollar deficits, is because of the bailouts supposedly caused by Bush. But then you turn right around and claim the banks paid it all back. Then how the heck did we have all that debt? Logic fail?

If the banks did in fact pay back all the bailout money, and Obama still managed to have trillion dollar deficits for 5 years.... doesn't that make him even more incompetent than we ever imagined? He got all the money back, and still managed to have a trillion dollar deficit?

This is a well known issue. Most of the money paid back, came from other government programs.

Baloney.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

They paid back over $200 billion, a portion of $4 billion doesn't mean you can say "Most of the money paid back, came from other government programs" Unless you use liberal bad math.

If the banks actually paid back all the money, then how the heck did the national debt double?

Because Obama spends like a drunken sailor.

He got all the money back, and still managed to have a trillion dollar deficit?

Yes.

Then you are not reading what I am reading. According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

You seem to have locked onto one example, and assumed no other example exists. The point of that $4 Billion program, being used to pay back government bailouts, was that if they are using that program... a program supposedly that earmarked those funds for small business loans... to pay back bailouts... then obviously they are likely using other programs the same way, which is exactly what the GAO shows.

According to the GAO, 40% of all institutions involved in TARP, repaid their bailouts with other government loans and programs.

Well, if you want to say that the biggest banks repaid over $200 billion in TARP funding while tiny banks, making up more than 40% of TARP banks, repaid about $2 billion in TARP loans with other loan money, I won't argue with that.

You'd still have to admit your claim that "most of the money paid back came from other government programs", because $2 billion is not most of over $200 billion.

I'm still not getting where you think it's limited to $2 Billion. In fact most of the reports I've read say it's impossible to know exactly how much money from the dozens of government programs, grants and subsidies the government is giving out, was used to repay TARP.

I mean given that all these banks supposedly reported budget losses, and yet were able to pay back the bailout in under 3 years? Where the heck did they have all this spare cash laying around to pay back TARP if they were losing money?

Citigroup recorded a lost of $20 billion in 2009 and $10 billion in 2010, but somehow paid back billions in TARP money in 2010? How? From what?

It makes sense if they were simply using other government programs and special loans to pay back TARP. If not, then I find it difficult to believe your assertion that is was only $2 Billion used to pay back hundreds of billions.

I'm still not getting where you think it's limited to $2 Billion.

From a link in the article you posted. It was the WSJ.

More than half of $4 billion in federal funds disbursed this year to spur small-business lending by community banks was used to repay bailout funds that the banks received under the government's Troubled Asset Relief Program.

See? More than half of $4 billion. Hardly enough to account for "All told, including dividend, interest and other payments, U.S. banks have repaid the government $211.5 billion under the Capital Purchase Program (CPP),"

In fact most of the reports I've read say it's impossible to know exactly how much money from the dozens of government programs, grants and subsidies the government is giving out, was used to repay TARP.

If you can find where Congress authorized over $200 billion in dozens of programs for banks, after they nearly shut down the government to approve TARP, let me know.

I mean given that all these banks supposedly reported budget losses, and yet were able to pay back the bailout in under 3 years?

Supposed losses? LOL!
Why is it hard to believe that banks with trillions in assets could repay $10 billion or $20 billion back once the markets stabilized?

I find it difficult to believe your assertion that is was only $2 Billion used to pay back hundreds of billions.

That's not my assertion, that's yours.
Big banks paid back their big loans.
Smaller banks struggled. Some used part of another $4 billion program to pay back their tiny loans.

 

[CultureCitizen]

Their income statement says otherwise:

Interest Expense 468,000

IBM Income Statement | Balance Sheet | Cash Flow | International Business Machines Stock - Yahoo Finance

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

The implication of your statement is "because everyone uses them, they must be required".

Again, every time you say "well everyone uses debt".... you are making an implied statement that debt is required. I don't care if it's common. That doesn't mean it's required or needed.

The fact that I am living proof that you can survive without any debt, shows my claim to be true. And while it's easy to point to myself, there are many others who have done exactly the same, and made massively profitable companies without debt.

You don't even realize just how many people choose to have a mortgage, not because it is needed, but rather because they have been convinced they are saving money on taxes, by getting the mortgage interest deduction. I actually met a lady who purchase a camper....... a CAMPER.... with a mortgage intentionally, because she wanted a tax deduction. That is mindlessly stupid. Borrow tens of thousands, to pay the bank thousands in interest, on a camper that drops in value like a 50 ton weight in the middle of the ocean, in order to save a few bucks in taxes?

I am not disregarding the ability to create growth with borrowed money. Of course you can. But along with that comes the crash and bankruptcy when the economy tanks, and you can't pay your debt service.

In the early to mid 1990s, Apple computer actually had negative operating revenue. They were losing money, year over year. They didn't declare bankruptcy, and restructure. Didn't have to. They didn't have any debt.

Equally I was working for a company, where during the corporate meeting, they projected a slide showing they had used up $950,000 of a line of credit with the bank. I said right then, that if they didn't pay down their debt, as soon as the first customer canceled an order, we would all be laid off instantly, because the company simply had too much debt. Everyone blew me off, said I didn't understand how credit allowed the company to grow. Sure enough one customer canceled an order, and the entire production department with only 2 exceptions (out of about 20 people) was laid off in under a week.

You know as much as the left-wing supports Warren Buffet, it's amazing no one on the left, listens to what he actually says. You hear what you like, and pretend he never says anything else.

10 Best Money Tips From Warren Buffett of All Time | GOBankingRates

Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest the way many Americans in debt do. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” Buffett said in a 1991 speech at Notre Dame. “You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”

Buffett is especially wary of credit cards. His advice is to avoid them altogether. “Interest rates are very high on credit cards,” Buffett once said in a news release. “Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke.”

Another key to ensuring security is to always keep cash reserves on hand. “We always maintain at least $20 billion — and usually far more — in cash equivalents,” Buffett said in the 2014 Berkshire Hathaway annual report. Buffett credits these reserves with helping Berkshire Hathaway stay afloat throughout the Great Recession, even as so many other businesses floundered.

Businesses and individuals alike might get an itch to put liquid cash to work through investments. “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” Buffett said. “When bills come due, only cash is legal tender,” he continued. “Don’t leave home without it.”
​

So even that know-nothing self-made multi-billionaire Warren Buffet, well know Democrat, says openly, Debt is bad. Have cash. Pay with cash. Have cash in the bank. Get rid of credit. Have interest work for you, instead of working for the banks.

*shrug* How much clearer can it get?

I fail to see what is your point. I have made clear that debt is both required to grow when it is kept under control and that it produces depresion or stagnation when it surpases 80% of gdp ( private debt at least) .

I personally think no mortgage should be higher than 3 years of household income and they should be paid in 15 years maximum.

The financial sector has gotten greedy ( and in the process it was helped by both reps and dems) .
The private debt in the US has increased too much and the only possible outcome is a permanent stagnation similar to Japan's.
Part of the private debt should be written off after which interest rates should be raised again.

 

[ScienceRocks]

America would do well to follow China for about a decade and invest in upgrading our infrastructure, reforming education and staying out of war. Maybe our economy could grow fast enough to pull us somewhat out of the debt.

 

[ScienceRocks]

Another thing we could do is make damn sure that the big corporations can't buy out all the little competition. Competition is good and we need to enforce our anti-trust laws big time.

 

[PurpleOwl]

Corporations are bound by law to generate maximum profits for their shareholders. They are not supposed to do whats best for the country or for anyone else.

 

[Andylusion]

No, actually it doesn't. He did not say IBM has never had debt. He said IBM grew to the biggest and most profitable company in history, without debt. Now I couldn't verify that, but I have heard that before.

IBM started in 1911. They became the top corporation in America, by the 1980s at the latest.

From what I understand, they never used any debt whatsoever, for the vast majority of 1911 to 1980s. You are looking at today when they are swimming in debt. True.... and IBM has fallen from being the top corporation in America. CVS is ahead of IBM honestly, and IBM right now, is in bad shape.

Regardless, it really irritates me when left-wingers go down this road of "this is the way it is" without looking at why.

Look at Apple computer.
Why Apple Is Borrowing $6.5 Billion And What Obama's Trying To Do About It


Yes, Apple computer is borrowing billions of dollars, that's true. Doesn't that make you ask 'why'?

Apple computer posted $18 Billion dollars in profit for just one quarter.
Apple computer has a massive $178 Billion in cash reserves.

But they are borrowing $6.5 Billion? Doesn't something there not add up?

Then you find out the obvious..... Apple is doing this to avoid taxes.

See, the left wing jacks up taxes on corporations, then provides tax incentives to borrow money, and now you look around and go:

"All the corporations are borrowing.... it must be necessary!"

No, you created conditions where people borrow money to avoid your crazy policies. This is like Obama care jacking up health insurance premiums, and driving business away from providing health insurance, and then claiming "see people need ObamaCare subsidized insurance!"... no you created a system where people use it, by ruining what we had.

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

The implication of your statement is "because everyone uses them, they must be required".

Again, every time you say "well everyone uses debt".... you are making an implied statement that debt is required. I don't care if it's common. That doesn't mean it's required or needed.

The fact that I am living proof that you can survive without any debt, shows my claim to be true. And while it's easy to point to myself, there are many others who have done exactly the same, and made massively profitable companies without debt.

You don't even realize just how many people choose to have a mortgage, not because it is needed, but rather because they have been convinced they are saving money on taxes, by getting the mortgage interest deduction. I actually met a lady who purchase a camper....... a CAMPER.... with a mortgage intentionally, because she wanted a tax deduction. That is mindlessly stupid. Borrow tens of thousands, to pay the bank thousands in interest, on a camper that drops in value like a 50 ton weight in the middle of the ocean, in order to save a few bucks in taxes?

I am not disregarding the ability to create growth with borrowed money. Of course you can. But along with that comes the crash and bankruptcy when the economy tanks, and you can't pay your debt service.

In the early to mid 1990s, Apple computer actually had negative operating revenue. They were losing money, year over year. They didn't declare bankruptcy, and restructure. Didn't have to. They didn't have any debt.

Equally I was working for a company, where during the corporate meeting, they projected a slide showing they had used up $950,000 of a line of credit with the bank. I said right then, that if they didn't pay down their debt, as soon as the first customer canceled an order, we would all be laid off instantly, because the company simply had too much debt. Everyone blew me off, said I didn't understand how credit allowed the company to grow. Sure enough one customer canceled an order, and the entire production department with only 2 exceptions (out of about 20 people) was laid off in under a week.

You know as much as the left-wing supports Warren Buffet, it's amazing no one on the left, listens to what he actually says. You hear what you like, and pretend he never says anything else.

10 Best Money Tips From Warren Buffett of All Time | GOBankingRates

Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest the way many Americans in debt do. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” Buffett said in a 1991 speech at Notre Dame. “You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”

Buffett is especially wary of credit cards. His advice is to avoid them altogether. “Interest rates are very high on credit cards,” Buffett once said in a news release. “Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke.”

Another key to ensuring security is to always keep cash reserves on hand. “We always maintain at least $20 billion — and usually far more — in cash equivalents,” Buffett said in the 2014 Berkshire Hathaway annual report. Buffett credits these reserves with helping Berkshire Hathaway stay afloat throughout the Great Recession, even as so many other businesses floundered.

Businesses and individuals alike might get an itch to put liquid cash to work through investments. “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” Buffett said. “When bills come due, only cash is legal tender,” he continued. “Don’t leave home without it.”
​

So even that know-nothing self-made multi-billionaire Warren Buffet, well know Democrat, says openly, Debt is bad. Have cash. Pay with cash. Have cash in the bank. Get rid of credit. Have interest work for you, instead of working for the banks.

*shrug* How much clearer can it get?

I fail to see what is your point. I have made clear that debt is both required to grow when it is kept under control and that it produces depresion or stagnation when it surpases 80% of gdp ( private debt at least) .

I personally think no mortgage should be higher than 3 years of household income and they should be paid in 15 years maximum.

The financial sector has gotten greedy ( and in the process it was helped by both reps and dems) .
The private debt in the US has increased too much and the only possible outcome is a permanent stagnation similar to Japan's.
Part of the private debt should be written off after which interest rates should be raised again.

"debt is both required to grow"

This is false. You are wrong. I'm sorry. The national debt was falling for most of the 1800s. It only went up during the civil war. It went up during world war 1 and 2. It fell all throughout the 1950s and 60s.

Debt does not create growth at the national level. If anything it harms growth. Where do you think the government gets the money from? People who could have invested the money into growth, instead of blowing it on government projects. Debt can be used at a personal level, to create growth, if you use it to build a business, assuming your business is successful. A dangerous assumption, which is why many many people grow the business without debt.

But the assumption that debt at the government level creates growth, is rarely true. Especially war spending debt.... how does that create growth? Think about it. Instead of investing resources into things that make our lives better, you invest it into a Tank. Does anyone's life dramatically improve from a tank? No. Of course not.

That is why, by any rational measurement, the standard of living fell during world war 2. Yes, GDP numbers were higher, but people lived increasingly austere lives. Making army fatigues, isn't a domestic fashion. People had rationed milk, eggs, meat, clothing, everything. People were worse off while the debt was sky rocketing. Not better.

In many cause people are better off when the monetary base shrinks, because it means the money you earn has more buying power, instead of less, for the same wage.

 

[Andylusion]

Corporations are bound by law to generate maximum profits for their shareholders. They are not supposed to do whats best for the country or for anyone else.

I don't even understand the idea that somehow we are worse off, if corporations do better. Whenever someone says "corporations should do more for the public", that to me is a bonkers statement. Are you saying that the products you buy, do not benefit you? Why the heck did you buy them? When you claim that corporations making profits isn't a benefit... are you including all the people who have jobs? Where do you think corporations gain the money to hire people? From profits!

Everything you have, and every job you can get, and every service you use.... is due to corporations.

If anyone really thinks that corporations are not a benefit to society, ok.... let's get rid of them and see how we do. No electricity, no computers, no cars, no homes, no clothing, no internet, no food, no heat, no nothing. And good luck finding a job..... not that you would need a wage, when there is nothing to buy....

Ready to live like the Amish? Actually that's not even true. The Amish live better lives, because of corporations. Ready to live worse than the Amish?

Idiots.

 

[CultureCitizen]

No , I am not using your silogism:

"All the corporations are borrowing.... it must be necessary!" ... your words , not mine.

In order to achieve growth production and monetary base have to grow.
Shrink the monetary base and you get a '29 style crisis.
Increase household debt too much and you get a '07 crisis.
Increase the corporate debt too much and ... well, we'll have to wait untill Chinas corporate debt busts to see what happens ( and how they handle that ).

Your point on Apple seems hard to proove, and even if it is true, what about the investors ? None of them required debt to purchase Apple stocks ?

Corporate debt aside , how many homeowners do you know were able to buy their house without any credit?
I do know some, but they usually had some land and built their own house in their spare time.

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

The implication of your statement is "because everyone uses them, they must be required".

Again, every time you say "well everyone uses debt".... you are making an implied statement that debt is required. I don't care if it's common. That doesn't mean it's required or needed.

The fact that I am living proof that you can survive without any debt, shows my claim to be true. And while it's easy to point to myself, there are many others who have done exactly the same, and made massively profitable companies without debt.

You don't even realize just how many people choose to have a mortgage, not because it is needed, but rather because they have been convinced they are saving money on taxes, by getting the mortgage interest deduction. I actually met a lady who purchase a camper....... a CAMPER.... with a mortgage intentionally, because she wanted a tax deduction. That is mindlessly stupid. Borrow tens of thousands, to pay the bank thousands in interest, on a camper that drops in value like a 50 ton weight in the middle of the ocean, in order to save a few bucks in taxes?

I am not disregarding the ability to create growth with borrowed money. Of course you can. But along with that comes the crash and bankruptcy when the economy tanks, and you can't pay your debt service.

In the early to mid 1990s, Apple computer actually had negative operating revenue. They were losing money, year over year. They didn't declare bankruptcy, and restructure. Didn't have to. They didn't have any debt.

Equally I was working for a company, where during the corporate meeting, they projected a slide showing they had used up $950,000 of a line of credit with the bank. I said right then, that if they didn't pay down their debt, as soon as the first customer canceled an order, we would all be laid off instantly, because the company simply had too much debt. Everyone blew me off, said I didn't understand how credit allowed the company to grow. Sure enough one customer canceled an order, and the entire production department with only 2 exceptions (out of about 20 people) was laid off in under a week.

You know as much as the left-wing supports Warren Buffet, it's amazing no one on the left, listens to what he actually says. You hear what you like, and pretend he never says anything else.

10 Best Money Tips From Warren Buffett of All Time | GOBankingRates

Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest the way many Americans in debt do. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” Buffett said in a 1991 speech at Notre Dame. “You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”

Buffett is especially wary of credit cards. His advice is to avoid them altogether. “Interest rates are very high on credit cards,” Buffett once said in a news release. “Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke.”

Another key to ensuring security is to always keep cash reserves on hand. “We always maintain at least $20 billion — and usually far more — in cash equivalents,” Buffett said in the 2014 Berkshire Hathaway annual report. Buffett credits these reserves with helping Berkshire Hathaway stay afloat throughout the Great Recession, even as so many other businesses floundered.

Businesses and individuals alike might get an itch to put liquid cash to work through investments. “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” Buffett said. “When bills come due, only cash is legal tender,” he continued. “Don’t leave home without it.”
​

So even that know-nothing self-made multi-billionaire Warren Buffet, well know Democrat, says openly, Debt is bad. Have cash. Pay with cash. Have cash in the bank. Get rid of credit. Have interest work for you, instead of working for the banks.

*shrug* How much clearer can it get?

I fail to see what is your point. I have made clear that debt is both required to grow when it is kept under control and that it produces depresion or stagnation when it surpases 80% of gdp ( private debt at least) .

I personally think no mortgage should be higher than 3 years of household income and they should be paid in 15 years maximum.

The financial sector has gotten greedy ( and in the process it was helped by both reps and dems) .
The private debt in the US has increased too much and the only possible outcome is a permanent stagnation similar to Japan's.
Part of the private debt should be written off after which interest rates should be raised again.

"debt is both required to grow"

This is false. You are wrong. I'm sorry. The national debt was falling for most of the 1800s. It only went up during the civil war. It went up during world war 1 and 2. It fell all throughout the 1950s and 60s.

Debt does not create growth at the national level. If anything it harms growth. Where do you think the government gets the money from? People who could have invested the money into growth, instead of blowing it on government projects. Debt can be used at a personal level, to create growth, if you use it to build a business, assuming your business is successful. A dangerous assumption, which is why many many people grow the business without debt.

But the assumption that debt at the government level creates growth, is rarely true. Especially war spending debt.... how does that create growth? Think about it. Instead of investing resources into things that make our lives better, you invest it into a Tank. Does anyone's life dramatically improve from a tank? No. Of course not.

That is why, by any rational measurement, the standard of living fell during world war 2. Yes, GDP numbers were higher, but people lived increasingly austere lives. Making army fatigues, isn't a domestic fashion. People had rationed milk, eggs, meat, clothing, everything. People were worse off while the debt was sky rocketing. Not better.

In many cause people are better off when the monetary base shrinks, because it means the money you earn has more buying power, instead of less, for the same wage.

First, I am talking about private debt. I share Keynes view that government should increase spending during recession and in times when private debt deflation occurs ( Keen). Of course , the goverment sucks at making sound investments, but that doesn't mean the private sector is guilt free ( I am astounded at how banks could create products such as CDS built on top of CDO built on top of MBS, ALL COMPLETELY OPAQUE).

So true, public debt increased, but at the same time private debt was decreasing.
In macro terms: consume = income + credit.
Money is created when loans are issued and disappears when they are being repaid.
So every time debts are being repaid there is stagnation or recesion ( it depends on the level of debt).

 

[CultureCitizen]

Corporations are bound by law to generate maximum profits for their shareholders. They are not supposed to do whats best for the country or for anyone else.

I don't even understand the idea that somehow we are worse off, if corporations do better. Whenever someone says "corporations should do more for the public", that to me is a bonkers statement. Are you saying that the products you buy, do not benefit you? Why the heck did you buy them? When you claim that corporations making profits isn't a benefit... are you including all the people who have jobs? Where do you think corporations gain the money to hire people? From profits!

Everything you have, and every job you can get, and every service you use.... is due to corporations.

If anyone really thinks that corporations are not a benefit to society, ok.... let's get rid of them and see how we do. No electricity, no computers, no cars, no homes, no clothing, no internet, no food, no heat, no nothing. And good luck finding a job..... not that you would need a wage, when there is nothing to buy....

Ready to live like the Amish? Actually that's not even true. The Amish live better lives, because of corporations. Ready to live worse than the Amish?

Idiots.

I don't even understand the idea that somehow we are worse off, if corporations do better.

This is not allways the case. But, due to the cyclic nature of economy if corporation's share of the economy increases, the share of the economy of household decreases. Eventually this leads into a recession or a credit bubble followed by recession . It is even worse when the financial sector's share increases, because no capital goods are adquired.

Everything you have, and every job you can get, and every service you use.... is due to corporations.

No , not true. Postal service , education, fire department , police department, judiciary system energy companies and oil ( imported from contries like Saudi arabia, Venezuela and Mexico) are all to part of the government or of SOEs ( that's why most economies are considered mixed economies).

 

[Andylusion]

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

Shrinking of the monetary base, is unfairly claimed to be responsible for down turns in the economy.

I would argue that claim is confusing the cause, with the effect.

Whenever you have a down turn in the economy, the monetary base nearly always shrinks. As fewer people borrow money, because they are no longer credit worthy, and as business stops borrowing to expand, because the economy sucks, lending declines. As loans are paid back, the money base shrinks. It's an effect of an economic crash, not a cause of an economic crash.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

In fact, most of the first 150 year of US history, we had deflation. And the monetary supply shrank for nearly the entire 1920s... you know the roaring 20s? In fact there were many periods of long running monetary supply reduction, that did not result in economic recessions.

Dude, I own Apple stock. Right now, I own Apple stock. I don't owe anyone anywhere, anything. I bought my car with cash. I have no credit cards. I have no student loans. I have no debt of any kind. Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

True that you didn't say that directly, but that is the implication you made when you said "I don't know of any corporation who hasn't relied on credit at one period of its life and that includes Apple." The implication is, because you don't know of a corporation who hasn't used credit, then it must be required for growth.

1) Sory ,that was just a shortcut, I've already been through a rather long discussion with Toddster about money creation.
Regardless : credit is a very common instrument to start a company and the most common way to buy a house.

I have never once stopped buying stuff, because I was declined a loan. Never happened. I have stopped buying stuff because work dried up, and I was unemployed. Happened quite a bit.

2) I fail to see what you are trying to proove here. Your personal finances do not reflect those of the rest of the US.

Why would you conclude that investors need debt to buy stock? I'm really confused by that. Maybe you could explain what you mean?

Most people use some sort of credit. How many of the apple stock buyers were using no credit at all at the time they bought the stock? You seem to disregard credit as one of the mechanisms to create growth , specially when it comes to corporations. Of course , credit can also be used in terrible ways.

The implication of your statement is "because everyone uses them, they must be required".

Again, every time you say "well everyone uses debt".... you are making an implied statement that debt is required. I don't care if it's common. That doesn't mean it's required or needed.

The fact that I am living proof that you can survive without any debt, shows my claim to be true. And while it's easy to point to myself, there are many others who have done exactly the same, and made massively profitable companies without debt.

You don't even realize just how many people choose to have a mortgage, not because it is needed, but rather because they have been convinced they are saving money on taxes, by getting the mortgage interest deduction. I actually met a lady who purchase a camper....... a CAMPER.... with a mortgage intentionally, because she wanted a tax deduction. That is mindlessly stupid. Borrow tens of thousands, to pay the bank thousands in interest, on a camper that drops in value like a 50 ton weight in the middle of the ocean, in order to save a few bucks in taxes?

I am not disregarding the ability to create growth with borrowed money. Of course you can. But along with that comes the crash and bankruptcy when the economy tanks, and you can't pay your debt service.

In the early to mid 1990s, Apple computer actually had negative operating revenue. They were losing money, year over year. They didn't declare bankruptcy, and restructure. Didn't have to. They didn't have any debt.

Equally I was working for a company, where during the corporate meeting, they projected a slide showing they had used up $950,000 of a line of credit with the bank. I said right then, that if they didn't pay down their debt, as soon as the first customer canceled an order, we would all be laid off instantly, because the company simply had too much debt. Everyone blew me off, said I didn't understand how credit allowed the company to grow. Sure enough one customer canceled an order, and the entire production department with only 2 exceptions (out of about 20 people) was laid off in under a week.

You know as much as the left-wing supports Warren Buffet, it's amazing no one on the left, listens to what he actually says. You hear what you like, and pretend he never says anything else.

10 Best Money Tips From Warren Buffett of All Time | GOBankingRates

Warren Buffett built his wealth by getting interest to work for him instead of working to pay interest the way many Americans in debt do. “I’ve seen more people fail because of liquor and leverage — leverage being borrowed money,” Buffett said in a 1991 speech at Notre Dame. “You really don’t need leverage in this world much. If you’re smart, you’re going to make a lot of money without borrowing.”

Buffett is especially wary of credit cards. His advice is to avoid them altogether. “Interest rates are very high on credit cards,” Buffett once said in a news release. “Sometimes they are 18 percent. Sometimes they are 20 percent. If I borrowed money at 18 or 20 percent, I’d be broke.”

Another key to ensuring security is to always keep cash reserves on hand. “We always maintain at least $20 billion — and usually far more — in cash equivalents,” Buffett said in the 2014 Berkshire Hathaway annual report. Buffett credits these reserves with helping Berkshire Hathaway stay afloat throughout the Great Recession, even as so many other businesses floundered.

Businesses and individuals alike might get an itch to put liquid cash to work through investments. “Cash, though, is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent,” Buffett said. “When bills come due, only cash is legal tender,” he continued. “Don’t leave home without it.”
​

So even that know-nothing self-made multi-billionaire Warren Buffet, well know Democrat, says openly, Debt is bad. Have cash. Pay with cash. Have cash in the bank. Get rid of credit. Have interest work for you, instead of working for the banks.

*shrug* How much clearer can it get?

I fail to see what is your point. I have made clear that debt is both required to grow when it is kept under control and that it produces depresion or stagnation when it surpases 80% of gdp ( private debt at least) .

I personally think no mortgage should be higher than 3 years of household income and they should be paid in 15 years maximum.

The financial sector has gotten greedy ( and in the process it was helped by both reps and dems) .
The private debt in the US has increased too much and the only possible outcome is a permanent stagnation similar to Japan's.
Part of the private debt should be written off after which interest rates should be raised again.

"debt is both required to grow"

This is false. You are wrong. I'm sorry. The national debt was falling for most of the 1800s. It only went up during the civil war. It went up during world war 1 and 2. It fell all throughout the 1950s and 60s.

Debt does not create growth at the national level. If anything it harms growth. Where do you think the government gets the money from? People who could have invested the money into growth, instead of blowing it on government projects. Debt can be used at a personal level, to create growth, if you use it to build a business, assuming your business is successful. A dangerous assumption, which is why many many people grow the business without debt.

But the assumption that debt at the government level creates growth, is rarely true. Especially war spending debt.... how does that create growth? Think about it. Instead of investing resources into things that make our lives better, you invest it into a Tank. Does anyone's life dramatically improve from a tank? No. Of course not.

That is why, by any rational measurement, the standard of living fell during world war 2. Yes, GDP numbers were higher, but people lived increasingly austere lives. Making army fatigues, isn't a domestic fashion. People had rationed milk, eggs, meat, clothing, everything. People were worse off while the debt was sky rocketing. Not better.

In many cause people are better off when the monetary base shrinks, because it means the money you earn has more buying power, instead of less, for the same wage.

First, I am talking about private debt. I share Keynes view that government should increase spending during recession and in times when private debt deflation occurs ( Keen). Of course , the goverment sucks at making sound investments, but that doesn't mean the private sector is guilt free ( I am astounded at how banks could create products such as CDS built on top of CDO built on top of MBS, ALL COMPLETELY OPAQUE).

So true, public debt increased, but at the same time private debt was decreasing.
In macro terms: consume = income + credit.
Money is created when loans are issued and disappears when they are being repaid.
So every time debts are being repaid there is stagnation or recesion ( it depends on the level of debt).

Debt is not required for growth, private or public.

Second, Keynes economics has been proven false dozens of times. The great depression was preceded by a massive increase in government spending. The result was a great depression. Equally, prior to then in the 1920s, a much larger recession was met with spending cuts, and the result was the roaring 20s. Also, after WW2, when government drastically cut spending, the economy grew far faster.

In 2000, Bush cut spending, resulting in a 5 year period of growth. And ironically ended with a recession where Bush, and Obama after him, drastically increased government spending, which resulted in the great depression.

I can't think of a single example where spending to combat a recession ever worked. Japan tried massive spending to counter the recession in their country, and the result was the economic lost decade.

What possible example do you have of Keynes economics working?

Yes, it is true that the private investors are not "guilt free". The difference though, is that when investors make bad choices in the private market, it only effects them.

My last company spend millions developing a product that never sold. How many people were affected by this? Just the people who owned that company.

When government spends billions on bad projects, and green energy, and bridges to no-where.... the entire country suffers from the increased taxes to pay back those debts.

The only exception to that, is when government bails out the private sector, which is both bad for the country, and is fundamental against capitalism. I'm trying to vote those people who engage in this socialism, out of government.

Credit Default Swaps prevented a much larger disaster, because it allowed banks to hedge against the defaults. Without CDSs, far more banks would have crashed.

Collateralize Debt Obligations, is what an MBS is. A mortgage backed security, is a CDO. The collateral, is the property. The Debt is the mortgage. The obligation, is the owners requirement to pay the bill. All mortgage backed securities, are CDOs. Not all CDOs are mortgage backed securities.

Now the kicker here is, out of the three things you mentioned, CDO, MBS, CDS, the banks only created Credit Default Swaps. Government created CDOs, and MBSs.

And a CDS is only a minor level of insurance. That's all the function it has. If someone defaults on your debts, then you get a small amount of money back, based on actuarial tables.

CDSs are good things. Not bad.

Again you are looking at the effect, and calling it the cause.

People repaying their debts, is not the cause of a recession.

The recession is the cause of people not borrowing, and repaying their debts.

 

[CultureCitizen]

Second, Keynes economics has been proven false dozens of times. The great depression was preceded by a massive increase in government spending.

No. Not true, look at the chart. What exploded massively was private debt.

 

[Andylusion]

Corporations are bound by law to generate maximum profits for their shareholders. They are not supposed to do whats best for the country or for anyone else.

I don't even understand the idea that somehow we are worse off, if corporations do better. Whenever someone says "corporations should do more for the public", that to me is a bonkers statement. Are you saying that the products you buy, do not benefit you? Why the heck did you buy them? When you claim that corporations making profits isn't a benefit... are you including all the people who have jobs? Where do you think corporations gain the money to hire people? From profits!

Everything you have, and every job you can get, and every service you use.... is due to corporations.

If anyone really thinks that corporations are not a benefit to society, ok.... let's get rid of them and see how we do. No electricity, no computers, no cars, no homes, no clothing, no internet, no food, no heat, no nothing. And good luck finding a job..... not that you would need a wage, when there is nothing to buy....

Ready to live like the Amish? Actually that's not even true. The Amish live better lives, because of corporations. Ready to live worse than the Amish?

Idiots.

I don't even understand the idea that somehow we are worse off, if corporations do better.

This is not allways the case. But, due to the cyclic nature of economy if corporation's share of the economy increases, the share of the economy of household decreases. Eventually this leads into a recession or a credit bubble followed by recession . It is even worse when the financial sector's share increases, because no capital goods are adquired.

Everything you have, and every job you can get, and every service you use.... is due to corporations.

No , not true. Postal service , education, fire department , police department, judiciary system energy companies and oil ( imported from contries like Saudi arabia, Venezuela and Mexico) are all to part of the government or of SOEs ( that's why most economies are considered mixed economies).

But that's wrong. Just flat out, that is wrong. The economy is not a static sum, where if I get $10 more, then someone else must get $10 less.

Moreover, if the corporations have a larger share, what do you think they do with it? They give out raises, they hire new employees, they invest more in growth.

So no, it doesn't lead to a credit bubble. My debt fell year over year, regardless of what companies did. If people borrow more money, then it creates a credit bubble, whether the corporations are making more or less. Has no effect either way.

If you live on less money, than you make in wages, nothing else matters. So every time you claim XXX causes people to go into debt.... I'm going to disagree with you.

No , not true. Postal service , education, fire department , police department, judiciary system energy companies and oil ( imported from contries like Saudi arabia, Venezuela and Mexico) are all to part of the government or of SOEs ( that's why most economies are considered mixed economies).

Everything you said there was wrong. Everything. Postal service? Yeah, I worked for a company that made the printers, that print out the stamps you use. Those scanners, scales, computers, the building the post off is in, the mail trucks, the paper to put your letters in,..... everything...... EVERYTHING...... is due to a corporation, that without which, you would have no US Post Office.

Which by the way, I have only used twice in 10 years. Email dude. Stop living in the stone age.

Education? Nice building, books, electricity, computers, pencil, pen, paper, backpack. By the way, all those teachers trained at private colleges and schools.

Police? Uniforms made by corporations, cars, guns, tasers, pepper spray, and on and on and on.

All those oil producing country? Yeah, that hire companies like Halliburton, Exxon, Shell, and BP, to produce all the equipment, drill the wells, build the refineries, and on and on and on.

Again..... everything you said was wrong. Without corporations NONE of that would exist. Not one bit of it.

 

[Andylusion]

Second, Keynes economics has been proven false dozens of times. The great depression was preceded by a massive increase in government spending.

No. Not true, look at the chart. What exploded massively was private debt.

Your chart, does not contradict my statement, nor prove your claims. I'm not sure what you think it proves.

We already went over the fact that correlation, does not equal causation. And we already know that the government pushed sub-prime loans, which resulted in higher private debt.

The fact this X happened, and Y happened, doesn't mean X caused Y. And it certainly doesn't prove without private debt, the economy would have crashed.

 

[CultureCitizen]

Moreover, if the corporations have a larger share, what do you think they do with it? They give out raises, they hire new employees, they invest more in growth.

No , not necesarily , here is an array of options:

1) Offshoring labour
2) Adquire capital goods to reduce labour cost
3) Invest it in a fancy instrument like a CDS ( which is just like using cash as fuel for a bonfire)
4) Secure the gains by buying assets ( gold, silver, properties) stock market
5) Buy back their own shares

Of course , not all corporations do that, many as you say give raises, train their employees and invest.
Looking at the flat line of the median household income and at the declining number of employed people this is not what most of the companies are doing.

 

[CultureCitizen]

Second, Keynes economics has been proven false dozens of times. The great depression was preceded by a massive increase in government spending.

No. Not true, look at the chart. What exploded massively was private debt.

Your chart, does not contradict my statement, nor prove your claims. I'm not sure what you think it proves.

We already went over the fact that correlation, does not equal causation. And we already know that the government pushed sub-prime loans, which resulted in higher private debt.

The fact this X happened, and Y happened, doesn't mean X caused Y. And it certainly doesn't prove without private debt, the economy would have crashed.

Maybe , but then you can see the same happen in Japan, Spain and other countries.

Regardless that doesn't change the fact that money is created when debt is issued and that it slowly disapears when it starts to be repaid.
Then think about this formula:

Consumption = income + new debt - debt payments

That little formula is the proof.

 

[Andylusion]

Moreover, if the corporations have a larger share, what do you think they do with it? They give out raises, they hire new employees, they invest more in growth.

No , not necesarily , here is an array of options:

1) Offshoring labour
2) Adquire capital goods to reduce labour cost
3) Invest it in a fancy instrument like a CDS ( which is just like using cash as fuel for a bonfire)
4) Secure the gains by buying assets ( gold, silver, properties) stock market
5) Buy back their own shares

Of course , not all corporations do that, many as you say give raises, train their employees and invest.
Looking at the flat line of the median household income and at the declining number of employed people this is not what most of the companies are doing.

When a company creates a job for someone outside the country, I don't understand people who are so selfish, that they think this is bad. Moreover, when a company invests outside the country, that is still a benefit to the home country. When they bring home profits to the US, those profits allow our companies to grow and expand.

I worked at a company where they wanted to do more international sales. We hired a guy specifically to do those international sales. The growth in our country, was directly due to growth outside of our country.

A general company has no reason to buy a CDS. Unless they have a default risk. Most companies are not in the lending business. Banks are in the lending business. Moreover, CDSs serve a useful purpose. If they didn't, no one would buy them.

When you say buying a CDS is like a fuel for a bonfire, you are only showing everyone that you don't know what you are talking about.

I don't know of any company that is buying up commodities. Certainly no company I have ever worked for has, and no company I have read about has.

Buying back shares, is hugely beneficial. Retirement funds, Pension plans, investments, IRAs, 401Ks, all benefit from share buy backs. Plus this reduces future dividend pay outs, freeing up future cash, for investment and growth.

As one who owns stock in various companies, I have benefited from share buy backs. Instead of complaining about it, go buy some stock, and reap the benefits.

Capital investment to replace labor.

Companies don't spend billions of dollars in this sort of thing, unless they have to. Most companies would rather avoid automation, if at all possible. But it's generally not possible.

I worked for a company that prior to, hand built all their CPU boards. They had it automated, so the work of 25 people, could be done by 1.

But the alternative was, go out of business. So in effect the capital investment to replace labor, was actually money spent preserving dozens of jobs. If they had not done this, the company would of closed, and EVERYONE would be unemployed.

So even that spending, is spending that benefits the entire country, and the people who worked there.