CREDIT
THE KEY TO SELF
GRATIFICATION, AND DESTRUCTION
[A lesson in
Economics]
Looking at the state of the economy in this nation, one would have to say, we are in serious trouble.
People are losing their jobs, their homes, and even their sanity. And while this is bad enough, we are seeing that big companies, and even our financial institutions, are having problems as well.
The financial institutions, the ones that make the economy work, have had to look to the government, for assistance, just to stay in business. Just about everybody knows, if these institutions fail, then the resulting effect would be, catastrophic, and possibly mean the end of our way of life.
Well, in all of this, just what is our way of life??
It is one where we tend to believe that happiness is our goal, and getting there is worth it, no matter what the cost. We are so in to being happy, that anything short of that, means we are failures, and failure is unacceptable.
Most of us, tend believe that true happiness is wealth, and all of the things that go along with it. Houses, cars, boats, jewelry, trips to exotic places, the ability to purchase anything you want, whenever you want it. That is the stuff, dreams are made of.
Why shouldn't we be able to enjoy those things as well?? Keeping up with the Joneses, is what it is called.
Well, thanks to a new tool, that actually, is not new, for it has been around since old testament times, many of us, have begun to use it, to tap in to that world of self gratification. No longer do we have to wait until we get rich, and have large bank accounts, to have the finer things in life.
Now, no matter what our financial condition is, we can walk and live with the 'big boys'. All we have to do, is take advantage of a little tool that is just waiting for us to use.
That tool, is credit. Credit, the 'great equalizer.' It can open up the doors to the 'good life.' It can make all of your dreams come true. It doesn't take much, just your signature, on a piece of paper, and you are off and running. A whole new world is out there, beckoning you to come and jump in, and enjoy your new life.
There was a time, when people, who had credit available to them, only used it, when necessity arose, and then, they would make sure that they could afford the payments, and paid them off, as quickly as possible. They took great care in using it, because they knew the trap that they could get caught up in, if they let it get control of them.
They had discipline, where they figured, that if they wanted [not needed] something, they would either save up and pay cash for it, or put it in a layaway, and make payments on it until they could pay it off. That way, there was no bill to pay, where they were obligated to fulfill a contract, in a certain period of time, thus, putting themselves at the mercy of some person, or company.
The bible says, Prv 22:7 The rich ruleth over the poor, and the borrower is servant to the lender.
When a person borrows something from another, or a company, they, in effect put themselves in the position of being a servant of that person, or company. That person, or company, becomes their master. It tells them how much they will have to pay back, and how long they will have, to pay off the bill, or they will be hauled in to court, and possibly face loss of the purchase, and still have to pay, even more money, and possibly serve jail time.
Even then, that may not be all there is to it. Back in bible times, debt was paid, not only by the borrower, but by their family. It was not unusual, for an entire family, being put in to servitude, because of debt. If the one that made the debt, failed to pay it off, or was unable because of injury or death, then the rest of the family, had to work to pay it off, or their possessions, or even members of the family, sold off, to satisfy the debt.
It was a vicious circle back then, and today, even though family members are not sold off to satisfy a debt, they still may be legally bound to a debt, if the one that originally made the debt, is unable to pay. However, the family today, is still liable for any debt, that the borrower is unable to pay.
So, going in to debt, does have consequences that are not all that apparent, when you are so engrossed in fulfilling you own desires.
But, that is not all the problem that credit causes.
Credit, enables more people to go out and buy things that they wouldn't ordinarily be able to buy. That means demand for the product goes up. In our system of economics, when demand for a product goes up, that usually causes an increase in the price of that product, which usually means that the cost of living will rise as well. When the cost of living goes up, working people tend to seek raises in pay, to keep up with that raise in cost of living.
When wages go up, that means employers have to raise the prices of the products they sell, to be able to continue their standard of living.
That further increases the cost of living.
So here we can see, credit, starts a chain of events, that goes further than just the family. It affects everyone.
The next stage is, when prices go up, one of several things will happen. One is, people will continue to buy the products at the higher prices, by going further in to debt, through using more credit, which will, in effect, keep the cost of living going up. Also, as the prices continue to go up, those that don't have credit, lose out on being able to buy the things they might need, let alone want.
Another thing that might happen is, as prices go up, consumers may back off from buying the products, causing lower demand, driving employers to lower prices. But then, there is a problem. The employees that these employers gave raises to, when the demand was high, are now faced with the problem of how to take back the raises they gave their employees.
Seeing that is a difficult thing to do, they resort to another solution, layoffs.
Layoffs, are a way for an employer, faced with loss of revenue, due to lower demand for their product, to save their business from going out of business, as revenue shrinks. When things were going good, and demand for their product[s], was high, employers usually would add more employees to help meet the demand. When demand slows, then employers have to let some of those employees go.
All of this takes place because of credit. The more we use it, the more jobs it creates. The minute we start backing off using it, it creates a situation for job loss. So, credit is the engine that is responsible for over 75% of most manufacturing jobs in this country. Lose that, and things start to unravel quickly.
The way our economy is running, is a train wreck waiting to happen.
It is built on false pretenses. The first of which is, the borrower believes they will be able to make payments for their purchases, for an extended period of time. If they have a job, they believe it will be there long enough for them to pay that purchase off. They don't considr job loss, sickness, injury, or some other incident coming in to play, that will cause them to not to be able to make those payments.
The biggest cause for things to unravel, is loss of employment. People, for the most part are pretty good at figuring out how much money they can afford to spend on things they want, after taking in to account what they absolutely have to spend for necessities. And, most of them stick to it.
The problem is, they base their figuring on a job that they have, that provides a steady wage, over a set period of time. Creditors, the reputable ones, look at the amount of money a person is making, and the type of job they have, in figuring how much this person can afford to pay. So, the job is the main source that goes in to the figuring, as to how much person can safely afford to spend, and how much credit can be extended to the individual.
This is a safeguard that reputable lenders use to
1. Protect their money, and
2. Protect the borrower.
Let's face it. Lenders are in the business, to make money. They do that by, lending money, and tacking on fees, so that when all is paid back, they have a profit. Therefore, it behooves them, to look at all of the available data concerning the borrower, to see if the person is worth the risk of lending money to. If a person has a good, steady job, and, has the ability to pay, and a good credit history, then, the company will take the chance, and extend credit, to this person.
n protecting the borrower, the lender knows what to look for, that will show that the customer, may be getting in to a situation, where they are at a high risk of not only being unable to make payments, but, may be getting caught up in a situation where they might find themselves in financial, personal, and legal problems.
When reputable lenders, turn down a request for a loan, or credit card, they are looking out for both their interests.
But, then, we have the less reputable lenders.
These lenders, also want to make money, however, they are less concerned with the well being of their customers. They will lend, or extend credit to just about anyone. However, they will do it, and tack on above average fees, so that they can make bigger profits, for taking the bigger risk, that reputable lenders won't take.
They don't care all that much, about what type of job you have, or how bad your credit history is, if you even have one. What they do care about, is making money, and they see a demand, for their service
The demand, usually comes from those who need, or want something so badly, that they will agree to anything, just to get it. These people are usually ones with low paying jobs, or on some sort of government assistance.
The lender, knowing this, will lend them the money, or extend credit to them, but at exorbitant rates. The reason the lender knows it, is because if they come to him, then he figures that they have tried other means, and were turned down. So, if they
get the credit/loan, then they have put themselves at high risk, because they stand a good chance of defaulting on payment of the loan, or, paying a greater amount of money back, than normal.
What is happening to our economy today, is the result of credit, drying up.
Practically everything in our economy, is driven by credit. Jobs are made possible, because of credit. Banks make money by extending credit.
The government functions on credit.
None of these entities, in reality, have the cash on hand, to fund their operations. They all are funded by reaching in to the future, so to speak, and taking money from an imaginary source, that they are counting on to be there, when the time comes.
That source is the hope that everything will keep going the way it is, or even better than it is today. Everybody will have their jobs, and will pay off their loans on time. No one will get sick. The demand for their products, will stay the same, or grow. These, along with a lot of other factors, are what everyone puts their faith in, when operating their business.
The problem is, as mentioned earlier, things do change, and not always for the better.
People lose their jobs. They get sick. They die. The demand for a business' product, drops, because of price, competition, or quality issues. As these things happen, that causes a greater demand on government, to provide for those that have suddenly become needy.
But, there is another problem. As these people lose their jobs, and businesses close, then the government is receiving less tax revenue, while the demand for their services, is going up.
And, how does government meet that need?? By borrowing from the future.
It has been said, and is a fact, that the wealth of the majority of individuals, and corporations, in this nation, is only on paper. What this means is, there is not enough real money in this nation, to give them, all of their money, in cash, if they asked for it, because it doesn't exist. It is a figment of the imagination. And, that is what our economy is running on, a figment of the imagination.
In order for our economy to function, 'you have to go out and get in debt!!'
Banks and department stores, are sending credit cards out to everybody. Why?? To keep the economy going. You are urged to 'buy American products', even though they may cost more, and have poorer quality, just to keep the economy going, and to protect the jobs of the American worker.
Now, here is the real problem that we need to think about.
Barack Obama says he wants to stimulate the economy by putting an infusion of cash in to it. Yet, the economy is already running at a deficit, meaning it has already outspent itself for about 30 years.
In order for Obama to put $775B-1.5T, in to it, that would essentially mean, what he wants to do, is borrow money this year, that would have to be paid back for 50, or more years from now, without the government spending another dime, for all of those years, and we know that isn't going to happen.
What this means is, our children, and their children, and their children, will have to work, to pay this debt back. And that isn't even looking at the interest that is being added to what was borrowed from past decades of borrowing.
To put it frankly, every thing the government promises, is predicated on the notion, that we will borrow from our great grand children's generation, and make them pay for our irresponsibility.
So, something written in a book, that many like to claim is nothing but the ramblings of some one who has no connection to us today, has proven the point of what borrowing does. We have become slaves to the future, all because we want what we want, when we want it.
Do you know why a lot of people continue to work, past the time they are eligible for retirement?? It is because they know, that their pensions, and/or social security, won't be enough to help them meet their financial obligations. They are truly slaves, to credit.
And, what's worse than this, is, our young people can't find good jobs, because these workers, that should have retired so
they can get a job, are holding on to them, because of a life time of chasing dreams, using credit. Then we wonder why they are resorting to crime, and whatever else they can get in to, to make some money.
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