Credit Where Credit is Due: a shout out thread for Things Trump Did Right

[bilby]

Sure. But how often does a poor person buy a new car?

I have a friend who buys the worst/cheapest POS he can find. Never puts any money into it. And just replaces it every 2-3 years with another POS. Only bothers with liability insurance, not damage. (never had an accident as far as I know).

So, he never buts a new car. He only ever buys used cars?

Or does he buy the worst new car he can find?

 

[Elixir]

Sure. But how often does a poor person buy a new car?

I have a friend who buys the worst/cheapest POS he can find. Never puts any money into it. And just replaces it every 2-3 years with another POS. Only bothers with liability insurance, not damage. (never had an accident as far as I know).

So, he never buts a new car. He only ever buys used cars?

Or does he buy the worst new car he can find?

I don’t buy the best anything. My first cars were old beaters. Then a couple of nice new ones because they were easy to finance and I didn’t know any better. Barely used is the best.
Now though, I don’t like feeling like crying because of a rock chip or parking lot ding.
I just have a 9 year old Ford Escape, a 25 year old Toyota Tacoma and a 24 year old Ford V10F250. And a 20 year old (bought new) MF1540 Tractor with bucket, backhoe etc.
The tractor was the most extravagant.
All the others were bought barely used and just never seemed worth upgrading. The Toyota and the escape live in the garage, the other one is usually hooked up to a horse trailer. They all work fine.

 

[lostone]

I also buy the cheapest car I can. I view every dollar spent on automobiles as wasted money. But I do make an effort to have a dependable vehicle.

 

[bilby]

Sure. But how often does a poor person buy a new car?

I have a friend who buys the worst/cheapest POS he can find. Never puts any money into it. And just replaces it every 2-3 years with another POS. Only bothers with liability insurance, not damage. (never had an accident as far as I know).

So, he never buts a new car. He only ever buys used cars?

Or does he buy the worst new car he can find?

I don’t buy the best anything. My first cars were old beaters. Then a couple of nice new ones because they were easy to finance and I didn’t know any better. Barely used is the best.
Now though, I don’t like feeling like crying because of a rock chip or parking lot ding.
I just have a 9 year old Ford Escape, a 25 year old Toyota Tacoma and a 24 year old Ford V10F250. And a 20 year old (bought new) MF1540 Tractor with bucket, backhoe etc.
The tractor was the most extravagant.
All the others were bought barely used and just never seemed worth upgrading. The Toyota and the escape live in the garage, the other one is usually hooked up to a horse trailer. They all work fine.

I also buy the cheapest car I can. I view every dollar spent on automobiles as wasted money. But I do make an effort to have a dependable vehicle.

So, inflation of new car prices has zero effect on you. I am prepared to bet that food price inflation effects you every month.

In order to maintain your lifestyle, you therefore need your income to track with or above inflation in food, rent, and other routine expenses, and not just above some basket of goods that includes new cars, or TVs, or computers, that you never buy, or buy very rarely - and that the purchase of which you can postpone indefinitely if prices are too high for your budget.

So you don't need your income to merely track "inflation", as defined by the fed or any other national body; You need it to track the inflation of those goods and services that are unavoidable, unless a sizable fraction of your spend is on such rare luxury purchases. Which for waged workers, it rarely is.

Right?

 

[unapologetic]

Or does he buy the worst new car he can find?

New wouldn't be the cheapest. I've never seen him drive a new car.

 

[Loren Pechtel]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

If Congress doesn't authorize the borrowing or printing it's impossible to pay.

 

[Loren Pechtel]

I also buy the cheapest car I can. I view every dollar spent on automobiles as wasted money. But I do make an effort to have a dependable vehicle.

I consider a beater a bad deal because car trouble can mean lost income unless you have some sort of backup.

 

[laughing dog]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

If Congress doesn't authorize the borrowing or printing it's impossible to pay.

That’s delinquency since it is a refusal to pay.

 

[bilby]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

If Congress doesn't authorize the borrowing or printing it's impossible to pay.

Congress is a branch of the government. If they won't authorise it, that's delinquency, not bankruptcy.

I can't declare bankruptcy on the grounds that I don't want to draw money from my bank account in order to pay my debts, and nor can the US government.

 

[Swammerdami]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Few if any, if by "US" you mean the government. Private businesses have foreign debts they will have trouble repaying if the dollar collapses but, e.g. the euro does not.

However the finances of the Western world are closely linked. If there is a dollar collapse, is it not the case that the euro, etc. will probably also fall?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

Why then does the debt ceiling turn into a regular crisis? Can't the U.S. Treasury just say "Ho hum. bilby says we can pay any interest or principal payments that come due."

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

It could render its debts worthless (or just worth less) by inflation, but that makes them no less easy to pay or to service - the creditors may end up with a stack of worthless dollars, but they will still get paid the dollars they are owed; it's not bankruptcy if you pay what you owe, even if the creditor was hoping that the payment would be more valuable than it turned out to be.

Of course. When people speak loosely of "USG bankruptcy" they don't anticipate the President filing for Chapter 7 liquidation in the United States District Court for the District of Columbia, with national parks, navy ships, etc. to be auctioned off to the highest bidder. Instead they anticipate some form of financial collapse, either severe inflation, or disavowing of obligations, or both.

So how could the US ever be bankrupt? "Close to bankruptcy" is a meaningless concept for a fiat currency issuer, all of whose debt is denominated in their own currency.

There you go again! Money in the U.S. is mostly bank-created money. JPMorgan Chase & Co owns over 2 trillion dollars in debt, much of which represents money it has created.

The USG does NOT issue fiat money, excepting for coins and postage stamps. Coins and postage stamps together make up only a very tiny portion of U.S. money. (The ability to issue fiat coins is what leads to the "trillion-dollar platinum coin" idea sometimes suggested as a solution to self-imposed debt ceiling crises.) The U.S. HAS issued fiat money in the past, most famously the "Greenbacks" (United States Notes) first issued by Abraham Lincoln in 1862 to finance war. Such Notes were last printed in 1969. I suppose the U.S. Treasury could spend the already-printed fiat paper money in its vaults except that . . .

The Treasury announced in 1996 that the remaining stock of $100 United States Notes had been destroyed.

I previously started a thread and hoped to explain the interesting differences between bank-created money and fiat money. But someone hijacked that thread to post irrlevant screeds against -- against what? against the concept of metal scarcity???

 

[Elixir]

you don't need your income to merely track "inflation", as defined by the fed or any other national body; You need it to track the inflation of those goods and services that are unavoidable

That’s right, for most people of “earning age”.
I’ve been retired FAPP for six years now, and last year the dollar value of my equitable holdings actually increased for the first time since retiring. But at my age, the idea is only to not let it decrease so fast that I live longer than it does, not to pretend I will live forever, and try to “own” as much as possible. Unless everything crashes pretty hard and fast, that should be do-able. But Trump will probably find a way to make things tight for people like me. There’s no end to their greed.

 

[Loren Pechtel]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

If Congress doesn't authorize the borrowing or printing it's impossible to pay.

That’s delinquency since it is a refusal to pay.

Remember, there's a debt. It would simply be refusing to borrow to pay.

 

[laughing dog]

Actually, we probably are close to bankruptcy

How is that even possible?

What debts does the US have that are not denominated in US dollars?

Bankruptcy is a declaration that you cannot and so will not pay your debts; But there is no circumstance under which the US government cannot pay any debt denominated in US dollars.

It could choose not to pay its debts - but that's not bankruptcy, it's just delinquency.

If Congress doesn't authorize the borrowing or printing it's impossible to pay.

That’s delinquency since it is a refusal to pay.

Remember, there's a debt. It would simply be refusing to borrow to pay.

No. It refusing to borrow, or to tax, or to print more money.

 

[bilby]

Why then does the debt ceiling turn into a regular crisis?

Because that it its sole purpose.

But it is just an internal bit of theatre played out by the US government. It's entirely voluntary.

If you owe me money, I just want you to pay me. I don't care about your internal angst over whether or not you feel like doing so, or over what other things you wanted to do instead of paying me.

The debt ceiling no more determines whether the US Government is bankrupt than would your personal desire not to dip into your savings account. It's not "can't pay"; It's "refuses to pay".

 

[bilby]

There you go again! Money in the U.S. is mostly bank-created money.

There you go again! "Mostly" isn't "only", and "doesn't" isn't "can't".

The US can always pay US dollar denominated debt. That it has a variety of convoluted but self-determined and entirely internal traditions that it likes to think excuses it from doing so, is of zero interest (pun intended) to its creditors.

 

[Swammerdami]

There you go again! Money in the U.S. is mostly bank-created money.

There you go again! "Mostly" isn't "only", and "doesn't" isn't "can't".

The US can always pay US dollar denominated debt. That it has a variety of convoluted but self-determined and entirely internal traditions that it likes to think excuses it from doing so, is of zero interest (pun intended) to its creditors.

You're still missing the point.

If Andrew Madoff could hack into a bank's computer, or had sufficient skill to print authentic-looking banknotes, he might be able to create U.S. money "out of thin air." But that would be illegal.

Similarly, Donald Trump could order the Treasury to print more United States Notes (or to counterfeit authentic-looking Federal Reserve Notes since the sudden re-emergence of U.S. Notes woud give the fraud away), but that would be illegal.
Elon Musk and his merry band might order the Federal Reserve Banks to give Musk write authority on their databases, with Musk's hackers then giving themselves as many billions as they wanted. But that would be illegal.

I agree that the U.S. Congress could pass a law authorizing Treasury to print greenbacks and let Trump spend them however he chooses. It could pass a law ordering Treasury to counterfeit euros, or more simply to confiscate foreigners' money sitting in U.S. banks. But such deviations from "tradition" would signal to the world that the Dollar had contracted a fatal disease, that the U.S. was "bankrupt" in common vernacular.

Now, if you suggest that it is a real possibility that this monster Trump will illegally create his own money, or get Congress to go along and legalize such a fraud, then I can agree with you to worry about this.

But you write as though the U.S.G. creating new "fiat" money was common-place, or already legal. This misconception just adds to confusion. At present, U.S. Treasury is not authorized to create any fiat money except by minting coins or printing postage stamps. Countries whose currencies are controlled by modern Western-style central banks can acquire unsupportable debts, or renege on financial obligations. What they CANNOT do without deviating from the central-bank paradigm is to print fiat money.

.

 

[laughing dog]

There you go again! Money in the U.S. is mostly bank-created money.

There you go again! "Mostly" isn't "only", and "doesn't" isn't "can't".

The US can always pay US dollar denominated debt. That it has a variety of convoluted but self-determined and entirely internal traditions that it likes to think excuses it from doing so, is of zero interest (pun intended) to its creditors.

You're still missing the point.

If Andrew Madoff could hack into a bank's computer, or had sufficient skill to print authentic-looking banknotes, he might be able to create U.S. money "out of thin air." But that would be illegal.

Similarly, Donald Trump could order the Treasury to print more United States Notes (or to counterfeit authentic-looking Federal Reserve Notes since the sudden re-emergence of U.S. Notes woud give the fraud away), but that would be illegal.
Elon Musk and his merry band might order the Federal Reserve Banks to give Musk write authority on their databases, with Musk's hackers then giving themselves as many billions as they wanted. But that would be illegal.

I agree that the U.S. Congress could pass a law authorizing Treasury to print greenbacks and let Trump spend them however he chooses. It could pass a law ordering Treasury to counterfeit euros, or more simply to confiscate foreigners' money sitting in U.S. banks. But such deviations from "tradition" would signal to the world that the Dollar had contracted a fatal disease, that the U.S. was "bankrupt" in common vernacular.

Now, if you suggest that it is a real possibility that this monster Trump will illegally create his own money, or get Congress to go along and legalize such a fraud, then I can agree with you to worry about this.

But you write as though the U.S.G. creating new "fiat" money was common-place, or already legal. This misconception just adds to confusion. At present, U.S. Treasury is not authorized to create any fiat money except by minting coins or printing postage stamps. Countries whose currencies are controlled by modern Western-style central banks can acquire unsupportable debts, or renege on financial obligations. What they CANNOT do without deviating from the central-bank paradigm is to print fiat money.

.

Actually the Federal Reserve orders the amount of currency to be printed and the Treasury prints it.

 

[Swammerdami]

Actually the Federal Reserve orders the amount of currency to be printed and the Treasury prints it.

And those banknotes sit in FedRes vaults, as meaningless as the Traveller's Cheques which B of A has printed but has not yet sold to a customer.

Except for sending them away for incineration when they look too soiled or torn to circulate, the ONLY thing FedRes Banks EVER do with those banknotes is to sell them to Member Banks at 100.0% of face value.

 

[Swammerdami]

Except for sending them away for incineration when they look too soiled or torn to circulate, the ONLY thing FedRes Banks EVER do with those banknotes is to sell them to Member Banks at 100.0% of face value.

Yes, there DOES appear to be some circularity! How does a Member Bank PAY for those banknotes, if "money" IS those banknotes (or bits on a computer equivalent to such money)?

I'd hoped this apparent paradox could lead to an interesting discussion but the thread I started got hijacked, apparently out of bizarre insistence that the Law of Supply and Demand -- despite that it applies to the prices of Aluminium, Cobalt, Iron etc. -- does NOT apply to Gold! LOL. (Or was the complaint about the ambiguity intrinsic to the word "intrinsic"?) Perhaps one complaint was that the use for money led to an inflation in the "value" of gold, but that belief is belied by the fact that the price of gold skyrocketed WHEN it ceased to be used as money!

 

[bilby]

apparently out of bizarre insistence that the Law of Supply and Demand -- despite that it applies to the prices of Aluminium, Cobalt, Iron etc. -- does NOT apply to Gold!

What effect would that law have on the prices of those other metals, if the vast majority of the metal ever mined and refined were still sitting in storage, unused, barely touched, and rarely even looked at?

If the "law" of supply and demand applied to gold, it would be worth a tiny fraction of its present value.

Most of it sits in expensive warehouses like Fort Knox, unlikely ever to see the light of day; What was the point of digging it out of the ground in the first place?