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A Question From A Very Wise 12 Year Old?

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He went on.................

If growth is an increase in debt, and we are at a point where we cannot increase out debt levels, or are unwilling to increase our debt levels due to unknown economic variables, then where can the growth come from. Should the point in time come where debt levels start to increase again, due to past defaults, paydowns, then thuis new debt serviceability must come from an increase in earnings? This increase in earnings is offset by an increase in debt serviceability costs, .i.e. increase in interest rates, as we are then witnessing an increase in earnings, and the increase in money supply via increased debt levels. So surley it will not take long till we reach debt saturation point again, and have to reduce debt servicing costs to accomodate peak debt. The inflationary wage increases will be offset by an increase in debt servicing costs, surely it is a closed loop with no way out apart from abandoning the whole system and writing down asset values set against debt levels...........

Not his actual words, but around about the same question..........................

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Probably advise him to emigrate or try and knock some bird up so he can get a council house a few years down the line.

laugh.gif

Very good and not the answer he was expecting.

But yes introduce him to burds and he has obviously hung around HPC types too long.

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He went on.................

If growth is an increase in debt, and we are at a point where we cannot increase out debt levels, or are unwilling to increase our debt levels due to unknown economic variables, then where can the growth come from. Should the point in time come where debt levels start to increase again, due to past defaults, paydowns, then thuis new debt serviceability must come from an increase in earnings? This increase in earnings is offset by an increase in debt serviceability costs, .i.e. increase in interest rates, as we are then witnessing an increase in earnings, and the increase in money supply via increased debt levels. So surley it will not take long till we reach debt saturation point again, and have to reduce debt servicing costs to accomodate peak debt. The inflationary wage increases will be offset by an increase in debt servicing costs, surely it is a closed loop with no way out apart from abandoning the whole system and writing down asset values set against debt levels...........

Not his actual words, but around about the same question..........................

Go play outside or I'll give you a clip round the ear.

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He went on.................

If growth is an increase in debt, and we are at a point where we cannot increase out debt levels, or are unwilling to increase our debt levels due to unknown economic variables, then where can the growth come from. Should the point in time come where debt levels start to increase again, due to past defaults, paydowns, then thuis new debt serviceability must come from an increase in earnings? This increase in earnings is offset by an increase in debt serviceability costs, .i.e. increase in interest rates, as we are then witnessing an increase in earnings, and the increase in money supply via increased debt levels. So surley it will not take long till we reach debt saturation point again, and have to reduce debt servicing costs to accomodate peak debt. The inflationary wage increases will be offset by an increase in debt servicing costs, surely it is a closed loop with no way out apart from abandoning the whole system and writing down asset values set against debt levels...........

Not his actual words, but around about the same question..........................

I would ask him to reframe his question in a more succinct and less rambling manner, and maybe brush up on his spelling :P

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Innovation.

Nice, but trite, answer. The sort of innovation I expect is the elimination of stupidity... there's no shortage of stupidity today, so there's plenty of scope for change.

To the 12 year old, I'd comment how effective it is to echo back others' questions as if they're your own. The other person will be immediately impressed and assume you're thinking what they're thinking, which will put you up in their estimation. Of course, you don't need to think the question has any merit - and you probably don't need to understand it properly yourself. It's a bit like philosophy where the golden rule is to never agree with anything, no matter how obvious it may seem - as, the more obtuse your behaviour, the smarter people will assume you to be.

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He went on.................

If growth is an increase in debt, and we are at a point where we cannot increase out debt levels, or are unwilling to increase our debt levels due to unknown economic variables, then where can the growth come from. Should the point in time come where debt levels start to increase again, due to past defaults, paydowns, then thuis new debt serviceability must come from an increase in earnings? This increase in earnings is offset by an increase in debt serviceability costs, .i.e. increase in interest rates, as we are then witnessing an increase in earnings, and the increase in money supply via increased debt levels. So surley it will not take long till we reach debt saturation point again, and have to reduce debt servicing costs to accomodate peak debt. The inflationary wage increases will be offset by an increase in debt servicing costs, surely it is a closed loop with no way out apart from abandoning the whole system and writing down asset values set against debt levels...........

Not his actual words, but around about the same question..........................

Tell him to stop waffling and go to work.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=167426

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If growth is an increase in debt - GDP is "activity", debt helps generate activity but its not the same thing

We are at a point where we cannot increase out debt levels - No true. It's just many of the people that have the debt at the moment are the ones that can't pay it back!

Where can the growth come from. - Cheap energy enabling more activity

Should the point in time come where debt levels start to increase again, due to past defaults, paydowns, then thuis new debt serviceability must come from an increase in earnings? - Or guaranteed low interest rates helping debt serviceability.

So surley it will not take long till we reach debt saturation point again - Legalised ZIRP or NIRP keeps the plate spinning.

surely it is a closed loop with no way out apart from abandoning the whole system and writing down asset values set against debt levels........... - write-offs looks like the way out. The question then is "who will take the loss" (not me!).

Edited by VeryMeanReversion

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  • 334 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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