Inflation

[3 hound]

A mortgage is a exception, definately good debt and investment into your future. However my path in life has not allowed me one, been walking the big uphill road on my own always, hence my nick

When you get a mortgage you can not rely on excuses anymore at life, you have to succeed and there is no second option. It's certainly not for everyone, in fact it's relentless. I did the whole thing completely on my own tho which probs makes it a bit harder (or not). When you get it done and dusted you will walk two inches taller.

there is something to be said for starting young but if your not ready then your not ready.

 

[sptrawler]

When you get a mortgage you can not rely on excuses anymore at life, you have to succeed and there is no second option. It's certainly not for everyone, in fact it's relentless. I did the whole thing completely on my own tho which probs makes it a bit harder (or not). When you get it done and dusted you will walk two inches taller.

there is something to be said for starting young but if your not ready then your not ready.

That's right, but trust me there will be someone in the future, telling you that you were lucky and you should be penalised.
The sad part will be, the media will agree with them and whatever you say will be taken as you just being a rich person who doesn't understand how hard it is.
That unfortunately is what Australia has become, if you manage to get ahead, you are reminded of those that didn't get ahead and you should contribute to help those to achieve what you have.
It is a very noble cause and my youngest son has tapped into it extremely well, which I am pleased to say has taken the burden off my shoulders. ?

 

[divs4ever]

A few Canaries in the Mine are dropping off aren't they @over9k ? Building Permits down to -18.5 from 42 Business and Consumer Confidence down. Is Inflation the only thing keeping us going - it's buy now effect on Consumers?

Employment figures out Thursday (for Aus).

that consumer spending will drop soon enough , expect buying limits soon ( maybe even rationing ) reduced goods on shelves and reduced money available for consumer discretionary spending

but of course scarcity in some items ( like food ) will ROCKET real inflation

 

[divs4ever]

That's right, but trust me there will be someone in the future, telling you that you were lucky and you should be penalised.
The sad part will be, the media will agree with them and whatever you say will be taken as you just being a rich person who doesn't understand how hard it is.
That unfortunately is what Australia has become, if you manage to get ahead, you are reminded of those that didn't get ahead and you should contribute to help those to achieve what you have.
It is a very noble cause and my youngest son has tapped into it extremely well, which I am pleased to say has taken the burden off my shoulders. ?

BRUTAL , but probably true in the not so distant future

and yes despite the income of media personalities , the worker who paid off their home is usually the target (media , councils , state , Federal government , insurers , etc etc etc )

wait until Communism hits here , NOBODY will do more than the bare minimum ( and some will regularly do less than that )

 

[sptrawler]

wait until Communism hits here , NOBODY will do more than the bare minimum ( and some will regularly do less than that )

That definitely appears to be the way we are heading, whether by design or by accident, I really don't know.

 

[divs4ever]

That definitely appears to be the way we are heading, whether by design or by accident, I really don't know.

by design in some cases , but also as a consequence of policies made inside and outside Australia

but is has been a progressive trend over a long time ( although it MIGHT be exponential soon )

the tragic part is there had been several historic examples to warn us about this path ( not just the Soviet Union )

 

[qldfrog]

by design in some cases , but also as a consequence of policies made inside and outside Australia

but is has been a progressive trend over a long time ( although it MIGHT be exponential soon )

the tragic part is there had been several historic examples to warn us about this path ( not just the Soviet Union )

40y of unrelenting socialism in France with very few at best center right govs intervals, a country in complete downfall on all criterias you can imagine and surviving on the back of yet people either want more of it . Macron or even vote more leftist via Mélenchon.
Until a country reaches total economic collapse like former USSR, Venezuela: you will always find a majority of people ready to steal from a minority.. until there is absolutely nothing left...pun..
Australia is just starting and inflation will give more and more place to real or perceived sufferings which will accelerate the trend..all for the benefit of this cronyism socialism taking over the world

 

[divs4ever]

the DIFFERENCE is nobody is sanctioning France , it is going that way under it's own impetus , whereas Communist/Socialist leaning folk could point out heavy sanctioning as part of the decline of the Soviet Union and Venezuela

and yes it seems the cronyism is the root cause of the demise of government styles both Communist/Socialist and 'Capitalist ' but of course , those governments would say they require more folk that they can trust ( even if it takes corruption to build those close relationships , as yes that sounds like an oxymoron to me , but here we are )

BTW the whole EU experiment is an evolving education in Communism ( and cronyism )

 

[againsthegrain]

40y of unrelenting socialism in France with very few at best center right govs intervals, a country in complete downfall on all criterias you can imagine and surviving on the back of yet people either want more of it . Macron or even vote more leftist via Mélenchon.
Until a country reaches total economic collapse like former USSR, Venezuela: you will always find a majority of people ready to steal from a minority.. until there is absolutely nothing left...pun..
Australia is just starting and inflation will give more and more place to real or perceived sufferings which will accelerate the trend..all for the benefit of this cronyism socialism taking over the world

It is really the opposite in communism, on paper everybody is equal, in practice 1% own 99% they rob from the majority.

 

[Value Collector]

Dumb question but doesn't inflation make debt go away in the sense that the average income was $100 and you have a debt of $10 then due to inflation you now have an income of $1000 so the original $10 is "less" money comparative to your current income.

It's why everyone laughed in Austin Powers when the out of touch bad guy stuck in the old days threatened world leaders with a ransom of a million dollars and they all laughed in his face at the once astronomical ransom value has become an unimpressive figure - the leaders all talk in trillions now.

Yes, provided that you can ride out the interest rate increases which normally come with inflation and that your debt is held at interest rates that aren’t above the rate of inflation.

This is the key point of inflation, it is a devaluation of the currency, so if you have borrowed currency from some one else and used it to buy a real world asset, it’s the owner of the currency that takes the inflation hit, and your real world asset will most likely be hedged against inflation over the longer term, even though in the short term high interest rates might suppress the real world prices of assets for a while.

 

[Value Collector]

What about the people that have managed to save $x to spend in retirement, unless it has been invested successfully at a gain that $x dollars over time has lost value so it affects a lot more people than you mentioned.

Fixed income is a bit misleading because wages always increase and so does welfare. They may or may not increase as fast but no income is fixed according to history.

The winners are the rich investors picking up the carnage of those gone broke and the poor who spend every cent they get and save nothing.

The majority in the middle lose because they save instead of spend and lack the means to buy up the carnage left by defaulters.

If they are holding their savings in currency/cash then they will lose purchasing power to inflation, if they are holding real assets they will largely be protected and their purchasing power should stay the same or Increase with investment earnings.

 

[3 hound]

It is really the opposite in communism, on paper everybody is equal, in practice 1% own 99% they rob from the majority.

I think communism is inevitable or at least a society that is highly regulated/controlled on personal and financial freedoms.

look who's breeding the most at least in Australia. Seeing a large family is becoming rarer than all previous generations but if you do see a large family the odds in Australia are pretty high that you can guess the source of the revenue stream supporting them.

 

[divs4ever]

It is really the opposite in communism, on paper everybody is equal, in practice 1% own 99% they rob from the majority.

that is how 'Capitalism ' is turning out , but not how 'free capital markets ' work

i would suggest it is the humans administrating EITHER system ( Communism/Socialism and Capitalism ) that is the problem

i have been in communist and socialist systems ( where the common people , or people with a common interest band together for MUTUAL benefit ) BUT 'regulations and organisation ' and later trying to form a power/political base , modifies a useful concept into a millstone around society's neck

also as a person involved in very small businesses ( where i sometimes had partners but rarely employees/sub-contractors ) i found distance from interaction with the client/customer a major disadvantage , so quite obviously ruling an 'empire ' was not for me .

but politicians ( and bureaucrats ) NEED to intervene so as to appear relevant and necessary , and we end up with political systems which SEEM to be opposing each other , but in reality are just a systems to amass control over others

 

[Garpal Gumnut]

If they are holding their savings in currency/cash then they will lose purchasing power to inflation, if they are holding real assets they will largely be protected and their purchasing power should stay the same or Increase with investment earnings.

The trick I believe is to be in control of the fist that controls out of control capitalism.

I have always tried to ensure that my needs were met when I was young and poor but earning, and that my wants are purchased when out of favour amongst the masses.

Untrammelled advertising and foreign or domestic robber baron companies inveigle the unwary in to useless spending.

Our local newspaper, the Townsville Bulletin is known colloquially as the Harvey Norman Times.

Domestic banks refuse to pass on interest rates.

I won't go on.

gg

 

[Value Collector]

A mortgage is only good debt, when it is weighed against what it costs, take for example someone who works in a city and rents an apartment for $600/week.
That apartment may be worth $1.3m to buy + say $10k a year in associated costs.
Right what if that person took a loan out to buy that apartment, how much better off would he be? I wont do the sums, because I'm lazy.

Now what if that person borrowed $600k and bought a 4x2 out in the suburbs, close to transport,schools and facilities and rented it out at $500/wk?
He stayed in the apartment at $600 and got a mate in to share the rent.
Not saying it is for everyone, but I'm not a great believer in borrowing upto the eyeballs to buy your house, which isn't deductable and is really only saving you rent.
I would rather go bush, earn mega bucks and rent, then at the same time buy an investment property that I want to move into eventually, than stay in the city on the treadmill and try and pay for it with after tax dollars while I live in it.
Just different ways of looking at the same issue IMO, there isn't a right and a wrong, only what suits your circumstances and sacrifices.

I agree the costs of ownership need to be weighed against the cost of renting, however most people do those sums incorrectly.

What I mean by this is that they take their total mortgage payment + the other costs (insurance, rates, maintenance etc) and compare that to the weekly rent.

In my opinion this is the wrong way to look at it.

1. Only the interest component of the mortgage payment is an expense, the principle payment is technically savings, eg principle payments are like a bank account you can access later, not a genuine cost.

2. Only part of the interest charge is a “real expense”, part of it is just an inflation offset, eg if you pay 4% interest, and the inflation rate is 3% you are really only spending 1% on interest and the other 3% is basically added back to the capital value of your home.

3, all the insurance, rates, maintenance etc are real costs, but when you add these to the small real after inflation interest rate, the weekly costs are small compared to renting.

This is why over the long term home owners end up way ahead, because their interest payments decline over the years as the loan shrinks, while the capital value increases with the principle payments accumulation, and the inflation offsets.

Where as the cost of renting never really decreases, and only goes up with inflation.

 

[divs4ever]

I think communism is inevitable or at least a society that is highly regulated/controlled on personal and financial freedoms.

look who's breeding the most at least in Australia. Seeing a large family is becoming rarer than all previous generations but if you do see a large family the odds in Australia are pretty high that you can guess the source of the revenue stream supporting them.

the SIZE of the 'C' makes a big difference to the outcome , commune is where a group of people group together for mutual benefit , some members are good at baking bread , others better at farming , still other efficient at building fences and buildings and by using the best people for a skill allows others the ability to efficiently utilize their talents also

a commune shares resources and outcomes , sure , but MEMBERS are not automatically equal in talents and skills , just in the share of benefits of the combined efforts

Communism introduces a regulatory/administrative class and immediately inefficiency creeps into the mix , a 'politburo' meets ponders and decides on what to do next , whereas a commune would immediately drop everything to fight a major fire , a politburo would need to organize a team etc etc , and response to the fire is slower and less instinctive ( taking away chances of adaptive improvements DURING the crisis )

BTW large families are a feature of societies with high mortality rates.
the idea in nature is the successful genetics survive and improve the chances to carry on the bloodlines , large families in a society that is stable and secure tends to drain the natural resources of the area ( eat themselves out of house and home ) in the medium term .

SADLY this trend in nature is not leveraged , where we could improve survival conditions in impoverished nations and thus slowly reduce population increases naturally ( reducing the drain of natural resources )

BUT this comes at a different cost the intense pressure on survival removed , genetics without a competitive advantage , are tolerated and multiplied ( look at our Royal Family could you see any of them leading an army from the front ala Napoleon Bonaparte )

 

[Garpal Gumnut]

the SIZE of the 'C' makes a big difference to the outcome , commune is where a group of people group together for mutual benefit , some members are good at baking bread , others better at farming , still other efficient at building fences and buildings and by using the best people for a skill allows others the ability to efficiently utilize their talents also

a commune shares resources and outcomes , sure , but MEMBERS are not automatically equal in talents and skills , just in the share of benefits of the combined efforts

Communism introduces a regulatory/administrative class and immediately inefficiency creeps into the mix , a 'politburo' meets ponders and decides on what to do next , whereas a commune would immediately drop everything to fight a major fire , a politburo would need to organize a team etc etc , and response to the fire is slower and less instinctive ( taking away chances of adaptive improvements DURING the crisis )

BTW large families are a feature of societies with high mortality rates.
the idea in nature is the successful genetics survive and improve the chances to carry on the bloodlines , large families in a society that is stable and secure tends to drain the natural resources of the area ( eat themselves out of house and home ) in the medium term .

SADLY this trend in nature is not leveraged , where we could improve survival conditions in impoverished nations and thus slowly reduce population increases naturally ( reducing the drain of natural resources )

BUT this comes at a different cost the intense pressure on survival removed , genetics without a competitive advantage , are tolerated and multiplied ( look at our Royal Family could you see any of them leading an army from the front ala Napoleon Bonaparte )

"Our Royal Family" ????

I suppose the Duchess of York could find some work behind the lines after the sun set.

gg

 

[3 hound]

BTW large families are a feature of societies with high mortality rates.

Not always while it is a feature of populations with high mortality there are more factors eg religion, ethnicity, politics, education.

For example two people with roughly same education, money, environment...etc the more conservative person (politically right leaning) is more fertile than their left leaning counterpart. Pew research has investigated this thoroughly. Religious people in first world countries tend to be more fertile than atheists as well normalising for all other factors.

 

[Value Collector]

This book is a good read for those interest in the history and growth of capitalism, and the history of the various European nations currencies and economies.

I don’t agree with all the authors opinions, but the historical facts are true, and it is good to hear how the other side thinks some times.

 

[Value Collector]

Not always while it is a feature of populations with high mortality there are more factors eg religion, ethnicity, politics, education.

For example two people with roughly same education, money, environment...etc the more conservative person (politically right leaning) is more fertile than their left leaning counterpart. Pew research has investigated this thoroughly. Religious people in first world countries tend to be more fertile than atheists as well normalising for all other factors.

Actually in the book “factfullness” they debunk the theory that religion and ethnicity determine birth rates, with out going into detail to much, they studied groups of the same ethnic and religious back grounds and found that even with in those same groups birth rates dropped depending on how educated their women were and their access to health care.

It ended up showing that regardless of what religion you were or your race, as your country got richer and your women more educated, birth rates dropped.

Even inside the USA you see higher birth rates in the poorer states.