It's The Debt, Stupid | Zero Hedge

It's The Debt, Stupid | Zero Hedge: "Dre4dwolf

The world is not perfect, people are greedy and generally it is very difficult to find competent people to work with, on one hand debt if used properly can be a great wealth creation tool, on the other when used improperly it is devistating.

The problem is, NO ONE (on an individual level) is given the opportunity to use debt responsibly because the cost of borrowing on an individual level is prohibitive and just not cost effective as the capital you borrow costs you more and more over time, and the value it returns to you is depreciating so rapidly.

The entire idea behind borrowing money is to use that money to expand productivity of a business and to spread the cost of consumer purchases out as far as possible so that people can maintain a higher living standard and micro manage their expenses along a time-line, this is becoming increasingly impossible for the consumer as interest rates for consumer level and small business level borrowing are maintained at such high %'s, companies generally (small ones) can not afford to pay upwards of 18% interest +++ on their debt, because there simply is not enough profit margin left to be had in the world to allow them to pay such fees and still keep their lights on.

Take a typical scenario of a construction company, many suppliers now regularly increase their prices 1 ~4% per line item every month.

This is COMPOUNDING percentage increases in the costs of say building supplies.

Take Roofing Shingles for example:

A bundle of roofing shingles today costs around 36$ (rough price)

In 12 Months you can easily expect those materials to cost 39~55$ or more! (check back in 12 months and look for an average price on shingles and you will see).

It doesn't sound like much.

But these material costs are not the only costs that are escalating on a constant basis, you have to deal with rising insurance premiums (because the entire insurance industry is fraudulent for the most part), rising materials, rising labor costs, rising permit and govt fees , rising taxation, rising utility costs, rising maintenance costs for equipment. . . .  . eventually costs will outstrip the companies ability to raise prices and remain competitive and something will give causing the company to go broke/out of business.

Now slap 18~25% ontop of whatever all that costs them, just to finance all that . . . . its not possible . . . your costs will outpace your ability to charge what you need to.

If small business could finance things at say 2% they would be able to increase productivity.

 

The money in and of itself is worthless, its just a tool , if anything we don't have enough money in the "real system".

 

I have been hypothesizing that in actuality, inflation is the best thing in a modernized economy because it allows small and large businesses alike and eventually the consumer to paper over and grease the wheels of the economy, the problem is in todays system very little (if any) of that inflationary money printing actually ever gets to the consumers or small businesses pocket. . .  and these large fraudulent corporations suck all the money out of the system causing deflation, which in turn causes businesses to fail (as there isn't enough money in circulation for the common folk) to conduct business regularly and all the small business try as they might to be competitive simply can not compete with fraudulent enterprises like banks and insurance companies.

 

The idea of protecting savers in todays world is unrealistic, as protecting savers and encouraging hoarding will only lead to economic problems down the road, we simply have too many mouths to feed, so try as you might to protect savers the net result will probably be riots and poor people stealing from said savers anyway . . . bad inflation , economics vs population is the leading cause financial strain on the population, (given that all real resources are easily aquired as an input to the economy)"



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