Posts Tagged ‘capital’

Until you’ve mastered the discipline of saving money, you have no realistic chance of developing the discipline to manage capital.” -Porter Stansberry

“Real credit comes from money that is saved… taken out of the consumer economy so that it can be used for emergencies and capital investments.  When it is paid back – usually out of increased output – the world is a richer place.  But try to trick the economy with phony credit – money that was never earned and never saved – and you are just asking for trouble.” -Bill Bonner

“Remember, compounding your capital is simply a way of saying that the growth of your money happens over and over again at regularly-timed intervals….  That’s the whole point of compounding, you earn money on the money you’ve earned….  The only way you can use compounding to your advantage is through time.” -David Eifrig

“The greatest shortcoming of the human race is our inability to understand the exponential function.” -Albert Bartlett

“The ‘exponential function’ is a mathematical way of explaining compounding….  Remember, compounding your capital is simply a way of saying that the growth of your money happens over and over again at regularly-timed intervals.” -David Eifrig

Yes…times have rarely been better for bankers.  In total, household borrowing has climbed back to $12.1 trillion − the highest level in five years − with balances growing across the credit spectrum once again, including mortgages and credit cards.  Happy days….  Our bankers have been world-class in providing more capital than ever before for corporations and consumers.  They’re doing a splendid job.  Don’t hate the bankers.  They only did what the government told them to do.  Besides… it’s not their money.  It’s yours.” -Porter Stansberry

“On Tuesday, the Italian government sold a 2-year note yielding MINUS 0.023%.  We don’t know what is more preposterous: that the Italians were able to borrow money at a negative nominal interest rate or that the press reported this transaction with a straight face….  But as long as rates remain below zero (and they could go lower!) money is not just free… it’s a cost not to borrow!…  Imagine you are buying a house…if a mortgage carries negative interest, it implies that the house (an equal capital value) also has negative value.” -Bill Bonner

Interesting times we are living in….

“You can’t fake an economic recovery….  Instead of ‘stimulating’ a recovery, the feds have ‘simulated’ one.  They dropped the price of capital to near zero.  Commodity producers took the bait.  They borrowed money and increased production….  You can’t get real demand from empty credit.  Real demand comes from Main Street, not Wall Street.” -Bill Bonner

Freak Economy

Posted: April 19, 2015 in Economics
Tags: , , , , ,

“Capital – what you get from saving money and investing it wisely – is an economy’s real muscle. EZ credit – what the quacks pump into flabby tissue to try to make things look more fetching – is what has turned the economy into such a freak.” -Bill Bonner

“This paper has investigated the effect of government assistance on bank risk taking. While we do not find a significant effect of government assistance on the aggregate credit supply, our results suggest a considerable effect on the risk of originated loans.

After being approved for federal funds […] participants issue riskier loans and increase capital allocations to riskier, higher-yield securities, as compared to banks that were denied federal funds. [T]he net effect is a significant increase in systemic risk and the probability of distress at approved banks. Overall, our evidence is broadly consistent with the theories that predict an increase in risk taking incentives as a result of government protection.” -Journal of Financial Economics, Professors Ran Duchin and Denis Sosyura

Debt Bondage

Posted: March 22, 2014 in Debt
Tags: , , , , , , ,

“…debt must be serviced and retired from future earnings. This reduces the amount of capital available for current wants and needs. Thus the future is placed in debt bondage to satisfy the desires of the here and now.” -Bill Bonner