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alstry (< 20)

There Will Be Little Credit In The Digital Age



April 29, 2010 – Comments (7)

If Fools went into the poorest neighborhood in Detroit and loaned each family and business one million dollars at 6% regardless of their ability to pay the loan back.........and then each month thereafter, took a camera crew and reporters to update the Fools.

In the first few months we would likely see dramtic improvements to the physical appearance of the homes, businesses and parks.  We would likely see sales increase dramatically in the neighborhood stores and tax revenues generated from the neighborhood spending would skyrocket.  The families would likely go out and spend lots of money on new clothes, appliances, and automobiles driving prosperity to anyone that got in their way.  Home values would incrase driving up property taxes.

Lawn services would likely have to increase employment, same with local businesses, and construction and home improvement would be booming.

Our FNBS reporters would be coming on TV every morning and bragging about the recovery, the businesses owners would be interviewed boasting about triple digit sales gains and the local politicians wouldn't know how to spend the new found tax revenues.

This behavior would go on day after day, week after week, month after month......UNTIL THE MONEY RAN OUT AND THE DEBTS HAD TO BE PAID BACK.......

Right now government and Wall Street is borrowing over $3 trillion dollars per year, much of it from our retirement/investment accounts, to keep the charde moving forward........


Welcome to the Digital Age.

7 Comments – Post Your Own

#1) On April 29, 2010 at 9:32 AM, PDTBiotech (85.22) wrote:

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#2) On April 29, 2010 at 9:54 AM, alasker (< 20) wrote:

It is a little sad that our government borrows so much money on our behalf- and on the behalf of the rest of the world. At the same time when you look at individual companies- contrary to what the media will have you believe- the US manufactures some amazing things- just doesnt generate enough economic activity to pay for what we promised. What set of personal skills in the Alstymous age will have value? 

Its hard to argue with some of my economically more liberal peers who say I want to take away grandpa's social security and medicare- to which i point out how does the younger generation working 36 hours a week (part time so companies do not have to pay benefits) at retail stores going to create the wealth to pay for the lifestyles and healthcare our loved ones and pensioners are accustomed to?

its a re-post- but this was interesting about moscow's contribution to the world stability

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#3) On April 29, 2010 at 11:53 AM, alasker (< 20) wrote:

I wonder what percentage of individual investors make a profit trading online? Some people do well. I made a small profit but stopped because it was interfering with my real job. But I have this vision of millions of unemployed people playing with their dwindeling savings online like the bus loads of older people from the retirement homes at the casinos- compared to people  starting businesses that physically make things.


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#4) On April 29, 2010 at 11:59 AM, chk999 (99.97) wrote:

I think your title is exactly backwards. There will be fewer purchases using cash and more using credit/debit types of instruments in the future.

Your "Digital Age" thesis is just dis-intermediation and you are at least a decade late in getting on that train. Specifically, I think that schooling below the college level going to largely home schooled over the internet is unlikely in the extreme.

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#5) On April 29, 2010 at 12:18 PM, alstry (< 20) wrote:

Credit is the opposite of debit even though the piece of plastic looks the same to the user and the the digital age almost every payment will be made with a debt instrument vs. a credit least for a generation or two.

If you don't understand the will soon.

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#6) On April 29, 2010 at 12:26 PM, alstry (< 20) wrote:

Please replace "debt instrument" in the second sentence with debit instrument.  Sorry for any confusion.

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#7) On April 29, 2010 at 2:26 PM, chk999 (99.97) wrote:

I know the difference between a debit card and a credit card. I used to work in the financial services industry. And I reiterate my point, there will be no dearth of credit in the future.

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