I take it as gospel (sic) that we are entering a depression. Throughout the history of capitalism, they are generally much more frequent and the recent 70 year absence of one has not changed the historical imperative. The depression itself isn’t so interesting (friend and former employee Eric Janszen’s iTulip (www.itulip.com) does a fine job).
What I’m more interested in are the social consequences. What happens when ten or twenty million Americans lose their homes and find their credit card debt unforgivable? I firmly believe that a generation has grown up thinking that you can spend more than you make using credit cards and occasionally wiping out that debt by refinancing the house and paying them off.
That process is no longer practical, but I don’t think many people have figured it out yet. The nice man at the mortgage brokerage said you can just finance later and the nice woman from the credit card company kept sending additional credit offers and the nice man at the real estate office said you can’t lose. Not everybody is a genius, so it’s hard to fault these people for falling prey, but what the hell happens when 10 or 10’s of millions of people get their lives shattered and have shackles attached that keep them indebted to credit card companies forever?
It’s going to get interesting.
Friday, November 2, 2007
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3 comments:
From a seed shall a great tree grow.
I look forward to watching this blog and seeing where it goes.
The world needs your rant.
I think we signed our fate back in 1913, when we allowed the Morgans, Rockefellers, Kuhns, and Loebs to literally write the Federal Reserve Act, and create a central bank. We've been extending credit, living beyond our means, and creating booms and busts ever since. Sure, it's a great system if you happen to be part of a government-connected corporation. But it's not so great for the poor and those with fixed incomes, who get stuck with ever increasing prices.
Certainly the booms and busts preceeded 1913; I've always felt that leaving the gold standard was the big mistake, resulting in the current (falling) fiat currency.
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