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No, The Economy Wasn't Built On Consumer Debt

Tyler Durden's picture




 

Submitted by Lance Roberts of STA Wealth Management,

 

 

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Fri, 06/06/2014 - 09:56 | 4829798 LawsofPhysics
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The financialization of everything.  Fuck these useless motherfucking paper-pushers.  Take their fucking heads already, my fields need more fertilizer.

Fri, 06/06/2014 - 10:16 | 4829874 BeerMe
BeerMe's picture

Reminds me of when I was looking for work around the country.  All I saw were these finance jobs but ones that didn't provide value to anyone.  It was kind of an "aha" moment knowing then the economic system is screwed up.

Fri, 06/06/2014 - 11:01 | 4830027 El Vaquero
El Vaquero's picture

+109

 

A friend of mine called me this morning.  He wants to take his family fishing tomorrow up in the mountains and camp out for the night.  He wants me to go.  You know what?  It's infinitely better than pushing paper, and I won't be taking out any consumer debt to do it.  I just need to get a chingadera of worms, throw some food together, grab my tent and some bedding, grab some beer, water my corn in the morning and go.

 

Go fishing LoP.  Give yourself a temporary reprieve from watching the rat race readying itself for implosion.  Take a day to enjoy yourself.  Then get back to plotting to fertilize your fields with a guillotine.  My enjoyment will not be financialized.

Fri, 06/06/2014 - 09:59 | 4829816 BeetleBailey
BeetleBailey's picture

ANYONE that heeds or believes a thing out of the fat pedo-smiling bankster cunt Liesman is a moron.

Why he is even quoted away from cBULLSHITnbc is even more asinine....

Fri, 06/06/2014 - 10:07 | 4829838 yogibear
yogibear's picture

He's just a cocky journalist repeating the Fed's agenda. 

Fri, 06/06/2014 - 11:16 | 4830099 Captain Willard
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I think it was Upton Sinclair who said that it's impossible to get a man to understand something when his salary depends upon not understanding it.

Fri, 06/06/2014 - 09:59 | 4829822 Cattender
Cattender's picture

being in Debt is Smart!

Fri, 06/06/2014 - 10:10 | 4829854 yogibear
yogibear's picture

Maybe they will start 200% LTV on homes. Load up on PMs and default.

This is your chance to screw the banks and end up with real money.

Fri, 06/06/2014 - 10:01 | 4829823 Squid Viscous
Squid Viscous's picture

OT - vix just hit 11.29...wow

Fri, 06/06/2014 - 10:54 | 4830004 Ungaro
Ungaro's picture

And that means what? In Feb. 2013, it hit 11.05 and the SPX kept going up in almost a straight line since.

Fri, 06/06/2014 - 10:03 | 4829829 Hohum
Hohum's picture

Once consumers stop living beyond their means, growth still won't accelerate.  The marginal cost of a barrel of oil approaching $100 will see to that.

Fri, 06/06/2014 - 10:04 | 4829831 yogibear
yogibear's picture

The model of the Federal Reserve. Debt to infinity. The savings and production model is history. Consumption and debt is the current model.

Why work? 

Current model, play stocks and spend. Why produce anything anymore.

Just print money and shuffle it through the economy.

Fri, 06/06/2014 - 10:06 | 4829832 NoDebt
NoDebt's picture

Could we get an Austrian-school economist in here, please.  This debate would be over in 30 seconds.

QUALITY matters.  Borrowing to buy plastic junk is BAD.  Borrowing for a PRODUCTIVE reason (some might even call it an investment in the future) is good.  Guess which of those two we've been doing a lot of lately?  Doesn't matter since the Keynesian Psychos only care about the aggregate number, regardless of purpose.

Fri, 06/06/2014 - 10:08 | 4829840 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

I've found that people who claim they "work hard and play hard" don't really work all that hard.

Fri, 06/06/2014 - 10:12 | 4829842 buzzsaw99
buzzsaw99's picture

Lance built a whole rebuttal to some inane liesman drivel? How funny.

Fri, 06/06/2014 - 10:13 | 4829845 Debugas
Debugas's picture

the US economy was and still is built on consumer debt

this is the way it is

 

and comparing debt to GDP is meaningless,

instead plot household income vs household spending.

As long as spending is above income you know that household is either tapping into its savings or living on consumer credit

Fri, 06/06/2014 - 12:36 | 4830403 DaddyO
DaddyO's picture

Spot On!

I am constantly trying to boil things down to their essence and you comment is so obvious as to be overlooked by the brainiacs that abound in the world.

If the US consumer could apply your simple logic, the .gov and the FED would collapse tomorrow!

DaddyO

Fri, 06/06/2014 - 10:08 | 4829847 MFL8240
MFL8240's picture

The bubbles were built on consumer debt and the economy is now a series of bubbles so indirectly he is correct!  But, the economy is built on lies and deception including the labor report today and that is what he needs to be discusiing!

Fri, 06/06/2014 - 10:09 | 4829851 pound the vix
pound the vix's picture

Debt has created billionaires at the expense of the average joe.  everytime the investor community was about to loose money from a normal resession the government bailed them out by issuing government debt at the federal and state level.  this debt was never paid back and went straight to the investor class.

Fri, 06/06/2014 - 10:10 | 4829855 indio007
indio007's picture

The problem isn't debt per se. It's usury.

Usury has been compared to murder going further back than Cicero.

Participating in usury was a mortal sin for thousands of years and would get your corpse thrown onto a dung heap.

Fri, 06/06/2014 - 10:46 | 4829974 NotApplicable
NotApplicable's picture

What about the participation of the borrower? Anybody borrowing to fund consumption deserves the fate they receive, regardless of any "excessive" interest rate.

Two things to note.

1. Interest is nothing but the cost of the time.

2. Stupid should hurt.

Fri, 06/06/2014 - 10:11 | 4829859 Spastica Rex
Spastica Rex's picture

Well, the country was at least partially built on slavery, which could be seen as a form of debt.

Fri, 06/06/2014 - 10:13 | 4829860 bigkahuna
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During a time with a strong currency and low interest rates - some debt is alright. During a time with weak currency and an ever imploding job market, and a fake economy - debt is a time bomb where the debtor is either in a race to delever before the SHTF or simply planning to default.

Delevering takes money (fiat) out of the economy going forward-

Defaulting takes credit out of the economy going forward-

People cheering on assumption of more debt in a time like now are irresponsible. We have to get our economic foundation back before debt can be taken on. To get our foundation back at this point, we are going to have to go through a maelstrom.

Fri, 06/06/2014 - 11:32 | 4830147 shovelhead
shovelhead's picture

Good debt = to increase production.

Bad debt = to increase consumption.

Both need to be used judiciously as they extract costs.*

 

* For far more people than 'special' others.

Fri, 06/06/2014 - 10:12 | 4829864 falak pema
falak pema's picture

the financialization of everything is a BUBBLE and like all bubbles it will burst. The best thing that this CB centralized takeover can do is to shut down the Casino economy, reinstate Gl-ST separation  and IMPOSE a debt jubilee on the financial world.

Game over Oligarchs. Go suck your own lollipops.

Fri, 06/06/2014 - 10:12 | 4829865 OC Sure
OC Sure's picture

The multi-generational tyranny of economics stands upon one false premise; that printng currency is money and that central banks do not counterfeit because thats what criminals do.

Serious opponents of tyranny would gain more ground by answering the following question:

If debt mediates an exchange between lender and borrower, then it represents an exchange of what? Something for something or Nothing for something?

Fri, 06/06/2014 - 10:12 | 4829866 Squid Viscous
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wonder how Steve would have fared during the Inquisition...

Fri, 06/06/2014 - 10:48 | 4829981 NotApplicable
NotApplicable's picture

He would be wearing a robe, praising the high priests, of course.

Fri, 06/06/2014 - 11:44 | 4830192 JRobby
JRobby's picture

Cry like a baby, then drawn and quartered followed by burning. His existence is blasphemy so..............

Fri, 06/06/2014 - 10:12 | 4829867 madcows
madcows's picture

Borrowing money to create something that will result in growth - i.e. a business that borrows to build a new factory is not necessarily a bad thing. This is where the banks are actually vital. 

However, there should be a distinction between business borrowing for productive means vs. main st borrowing for useless crap.  There is no reason anyone should ever have credit card debt.  There is no reason anyone should borrow to buy an overpriced luxury SUV or a McMansion with zero down.

In other words, some debt can grow the economy and other debt is extremely destructive to the economy.

Not mentioned in the article is Margin debt.  All those fucking financial weapons of mass destruction are akin to bad debt.  All those frigging leveraged CDS and derivatives... those were all based on collateral of collateral of collateral, which is nothing more than borrowed money.

Fri, 06/06/2014 - 10:19 | 4829884 jackstraw001
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My attitude toward the purchase of anything "new" (with the exception of PMs) has undergone a seachange since 2008.  I refuse to play the bankster game on their own playing field and will never get back on the consumer debt hampster wheel.  I make plenty of fiat paper every year but don't need all the shiny toys to make my pecker feel bigger.  Give me liquidity, hard assets and a nose for buying good stuff on the cheap from overlevered/overextended sheeple when SHTF.   

Fri, 06/06/2014 - 10:26 | 4829909 Puncher75
Puncher75's picture

You really have to wonder if these guys even spend a moment to think about what it is they are saying.  I truly belive they just repeat what they hear others say; even the ones at the "highest levels".  They are truly parrots.  Nothing (or not much) more. 

Fri, 06/06/2014 - 10:42 | 4829961 JR
JR's picture

From America’s early beginnings two forces have struggled to control her direction: one) the rights to property, production and growth through innovation, invention and contract and, two) the promoters of debt who would use government to grow their industry and a commission on the labor and production of others.

The result: the people become slaves to debt, their growth is regulated and the debt-controllers become incredibly wealthy and powerful.

It’s one thing for a factory owner to obtain a bank loan to expand his factory and production; it’s quite another thing for the banker to demand control of the factory before agreeing to the loan.

At this point, the American Dream is moving under control of the internationalists – financiers and non-U.S. bankers such as Stanley Fischer. When America established the Fed, she sealed her fate by relinquishing her sovereignty and her future to treacherous universalists who have no loyalty to America, her families, her convictions, or her borders.

If a free enterprise culture produces innovation, then that culture should be a part of the resulting prosperity.  But it isn’t.

Richard Benson of Specialty Finance Group asks the pre-inflation $64 question: "If mankind's machines produce more with less labor each year, why shouldn't the dollar I make this year buy more next year? Shouldn't this increase in productivity flow through to the wage earner and saver?”

Why isn’t it?

We are being robbed.

Adds Benson: “Man is such a lucky creature because machines do all of our work. Our economy and prosperity stand on the shoulders of the geniuses who invented the wheel, lever and plow, and the creative thinkers who dreamed up mathematics, the internal combustion engine, silicone chip and the internet. These innovations have led to wondrous and unforeseen leaps forward for mankind. Human ingenuity, mixed with a desire to do better and produce more with less, has relentlessly driven productivity forward…”

Bankers didn’t do that; that didn’t build that. Free enterprise exercised by free men did that in America, once the patent giant of the world. (In 1997, a study of the inventors honored in the National Inventors Hall of Fame in Akron, Ohio, revealed that 91% of the world’s greatest inventors worked in America and only 9% in other countries.)

Americans’ standard of living should be soaring and reaching the far corners of the globe. The public’s bonus should be its share of its contribution to the productivity of the Great American Dream economy: those benefits should be open to all American citizens, yet they’ve become the sole property of the bankers and the corporations for their sole profits.

Communism did not die with the U.S.S.R. Communism is a program. It is deliberately identified as a Soviet-inspired system, when it isn’t.  Now, all the fears of patriot Americans in the 40s have come true. All the attacks on capitalism and free enterprise and freedom fit their program.

It was the growth of collectivism and coercive central planning and the reversal of the fundamental principles of American life and culture under the banner of the Federal Reserve that transferred America’s wealth to these International bankers and set her down the Road to Serfdom, i.e., to world socialism.

A relatively small group of people, such as Goldman Sachs investment bankers, will continue to take the nation's wealth and redistribute it to themselves until our free society and its worldwide cornucopia of wealth disappears from the face of the earth.  Without personal liberty, there is no economic liberty, and no need for investors. 

"When the capitalist is gone," asks Ruth Wilder Lane, "who will manage production? The State.  And what is the State?  The State will be the mass of toiling workers."

Masses of toiling workers do not invest.

Money is the blood of civilized society, the means of all commercial trade except simple barter. America has relinquished the source of her lifeblood to those who will “deprive the people of their property…until their children will wake up homeless on the continent their fathers conquered.”

Fri, 06/06/2014 - 10:45 | 4829966 BeerMe
BeerMe's picture

thank honest Abe for getting the ball rolling on government being involved in industry

Fri, 06/06/2014 - 10:49 | 4829978 Flakmeister
Flakmeister's picture

So you correctly identify that that labors share of the productivity gains was pocketed by others. 

I'll give you a hint, the bankers and the corps did not take all of it. Not even close...

So just how would you stop labor getting the shaft? 

Are you going to wave your magic wand?

I'll give you another hint...

The sharks screwed Joe Six-Pack in the name of "Personal Liberty" and "Capitalism"....

Fri, 06/06/2014 - 11:02 | 4830031 JR
JR's picture

That pretty much says it all – the Marxist doctrine that enabled the tyrants to use a false democracy to move the money to their pockets. I believe Lenin called the believers “useful idiots.”

Fri, 06/06/2014 - 12:05 | 4830249 falak pema
falak pema's picture

If Richard Nixon, RR, Bush Senior, Clinton, GWB and Cheney are "marxist" tyrants what does it make Putin and Hollande? 

Apologists for a Camelotian Pioneerist America that never existed except in Jonh Ford's westerns; and even he knew he was just painting the legend not unraveling the truth. 

When you spend your time denying the historical construct of America from Jefferson to FDR, and foulmouth the state as "marxist" antichrist; you get what you deserve : a return to Rome or to Inquisitorial warmongering NSA NSA Spanish Main type inquisition. 

Fri, 06/06/2014 - 12:20 | 4830315 shovelhead
shovelhead's picture

Putin and Hollande?

Crony capitalists exactly the same as the others. Doesn't much matter if the money comes from corporations, banks, MIC or unions.

You have power. Your friends help to protect that power and fight off rival warlords.

Same as always.

Voting just narrows the battlefield.

Fri, 06/06/2014 - 11:58 | 4830210 shovelhead
shovelhead's picture

Why aren't increased production goods cheaper?

Fiat money, fractional lending and credit.

All are counterfeit 'money' that flood the market and devalue the real value of everyones labor.

Credit that come from savings is perfectly fine but you better put it into increasing production because it wouldn't be cheap or plentiful.

Readers Digest version you could add a billion words to but not change a thing.

Fri, 06/06/2014 - 10:42 | 4829962 BeerMe
BeerMe's picture

Kind of funny saying debt is good.  When in fact it ends up being a one time boost and as debt payments get higher there is less money to spend monthly.  We've all seen the families where both parents work have a nice house, cars and boats or whatever.  It would shock most how broke they really are when all their earnings goes to bill payments.

Fri, 06/06/2014 - 11:11 | 4830072 JR
JR's picture

“[T]he end stage will come when it will be out of control and they [the Fed] admit that prices are going up.  They are going up, but not enough to the point where that’s a number-one concern of the people.  But, you know, we see housing prices going up rapidly and medical care costs and all these things, a tremendous amount of inflation.  But that’s the deep concern.  And the world, they’re still buying dollars.  They’re still taking our dollars and selling us stuff.  So the Fed will continue to do what’s happening.  So there will be a market phenomenon when the attitudes change and people lose confidence.  But every single day, of course, we get closer to this particular date.  But it will come, and nobody knows when it will come…

… All central bankers do the same thing.  They facilitate big government.  They print money and take care of the banks and finance wars and welfare.  So there’s no way that’s going to change until the currency is destroyed…

… they’re at the point now where the biggest personal debt right now is student debt.  It’s approximately a trillion dollars.  And they’re not getting very many good jobs.  Maybe jobs have perked up a little bit now but that’s not going to last.  And so many are unemployed or underemployed.  How many college graduates are working at McDonald’s?  They say there’s a bunch of them…” – Ron Paul, May 28, 2013

http://www.lewrockwell.com/2014/06/no_author/kids-war-and-banksters/

Fri, 06/06/2014 - 12:21 | 4830250 shovelhead
shovelhead's picture

4830147 shovelhead

see above

Fri, 06/06/2014 - 12:31 | 4830378 OC Sure
OC Sure's picture

"Kind of funny saying debt is good."

The only difference between debt and currency is that debt is a delayed payment. They both mediate an exchange. To determine if debt is good or bad, just like currency,  we need to answer the question; The debt, or currency, mediates an exchange of what?

"Good debt is represented by money, the money represents the product of work, the work is necessary to meet the demands of living. Bad debt is represented by counterfeit, the counterfeit represents the absence of product, the absence of product represents the impersonation of work, the impersonation of work represents the necessity to steal to meet the demands of living."  -OC Sure; Debts and Wages 

 

Fri, 06/06/2014 - 11:18 | 4830110 GrinandBearit
GrinandBearit's picture

I bet there are a LOT of people out there that would love to see LIESman's skull caved in.

I sure would.

Fri, 06/06/2014 - 11:43 | 4830191 MedicalQuack
MedicalQuack's picture

It's 'The Grays" again, people can't the difference between virtual values and real world values..so let's make it up as we go.  I think our pocket books are tired of that.  It's a big problem with virtual and real world value confusion, why I come here to this site the focus is on the real world. 

http://ducknetweb.blogspot.com/2014/03/virtual-worlds-real-world-we-have...

Well I just keep the Killer Algorithm page vides with folks smarter than me out there that also address the real world.  I just wrote out the new HHS Secretary approved and pondered if will get a break from the Sebelius Syndrome that has spread massively through Congress, the White House and more.  We have Mary Jo White in the afflicted group too:) 

http://ducknetweb.blogspot.com/2014/06/sylva-burwell-confirmed-as-new-hh...

Fri, 06/06/2014 - 12:00 | 4830235 T-NUTZ
T-NUTZ's picture

Steve Lies-man

poetic justice

Fri, 06/06/2014 - 16:08 | 4831129 TeethVillage88s
TeethVillage88s's picture

For what it's worth: I expand definitions of both socialism & privatization to understand the Federal Budget.

Congress gets both health care & pension benefits, just like the US Military. Both Socialism and both expand federal budget. Emergency workers in police, fire, EMS crews are socialism just usually paid by local government. If we have hundreds of thousands of new federal contracts each year this is a real boon for contractors even if just paper, office supplies. But who is watching the watchers and keeping an eye on where federal tax dollars go???

Now we see congress asking to increase the gasoline tax/Diesel Tax (Excise) saying there isn't enough money for infrastructure (Socialism).

Federal Highway Trust Revenue 1999 = $39,179
Federal Highway Trust Revenue 2000 = $35,499
Federal Highway Trust Revenue 2006 = $38,780
Federal Highway Trust Revenue 2008 = $44,404
Federal Highway Trust Revenue 2013 = $42,300 (Spent more than Revenue 2013)

Research shows that congress provided additional funds increasing the funding through new bills. Below are Outlays for Highways.
Highway Trust Fund Outlays 2008 = $35,716 M
Highway Trust Fund Outlays 2009 = $36,347
Highway Infra-Invest Rec Act 2009 = $2,417 M
Highway Trust Fund Outlays 2010 = $30,778 M
Highway Infra-Invest Rec Act 2010 = $11,897 M
Highway Trust Fund Outlays 2011 = $36,136
Highway Infra-Invest Rec Act 2011 = $7,966 M
Highway Trust Fund Outlays 2012 = $40,018
Highway Infra-Invest Rec Act 2012 = $3,028 M
Highway Trust Fund Outlays 2013 = $41,742
Highway Infra-Invest Rec Act 2013 = $1,116 M

Basically we spend $45 Billion on Highway admin each year and last year it was about $50 Billion. Where does it go?

I say we DON'T AUDIT, Investigate, or Inspect Federal Spending Enough. Despite having IGs & GAO. Of course we all use Highways & bridges & water, so compared to the $700 Billion just in DoD in 2011... $50 Billion is either cheap or DoD is very expensive and over budgeted at $600 Billion this year. Black budgets for Intelligence must be North of $100 Billion, but who knows. Maybe we should match Highway & infrastructure spending to Intelligence, but audit them both.

18.3 cents per gal gasoline, 24.4 cents per gal diesel fuel, but last Gas Tax Bill was only 1997 (Can't get 20 years without new rip off bill). Do you hear congress complain about their pensions or the price of gas?? No.

Fri, 06/06/2014 - 20:56 | 4831687 malek
malek's picture

 "Debt is always pointed out as a negative thing, when in fact debt is the great bridge between working hard and playing hard in this country.This country has been built on consumer debt."

I had comparable thoughts when I read that for the first time: "this is so much convoluted bullshit in one statement, it can only have been made with the intention to let the rational thinker form a brain knot."

How does one bridge something that usually is perceived to need balance?
(Is "playing hard" even meant as leisure, or as using deception and similar where hard work won't get you?)

Whatever, this just gives me a good hard laugh over such clowns.

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