Arabs in U.S. could be held, official warns

[Sava]

Actually, I agree with Fez (shivers)... I say drop a bomb on Baghdad, and then let's start WW3, Arabs vs the West. After the West wins, we can focus on China.

[Giancarlo]

Originally posted by Sava
Actually, I agree with Fez (shivers)... I say drop a bomb on Baghdad, and then let's start WW3, Arabs vs the West. After the West wins, we can focus on China.

No that is not what I meant. And I won't even ****ing bother explaining.....

[Sava]

I'm not being sarcastic Fez. I truly think we should nuke Baghdad.

[Giancarlo]

Originally posted by Sava
I'm not being sarcastic Fez. I truly think we should nuke Baghdad.

Forget it. I don't even know when to believe when you are being sarcastic or not.

[Sava]

I can't say that I blame you...

I just look at what the historical outcome of a decisive war is. WW2 is the #1 example. Every bit of ground that the Allies liberated is now Democratic and prospering economically. I think that the US has a responsibility to liberate the Arab nations from their oppressive, fundamentalist regimes.

[Giancarlo]

And maybe you are right. Iraq might have to be broken into two though for that to occur... and every mullah in Iran will have to be imprisoned.

[Sava]

That's why I say, drop the nuke, let God (or Allah ) sort em out.

[Ned]

Originally posted by Frogger

And, let's further assume that deflation is at 10%. That 980 is worth approx. $1080 in constant value buying power. The loan cost you 1080-1000 (you kept 20) = 80

We already posited a 50% deflation rate, sweetheart. It doesn't matter. The loan didn't cost me anything. At the beginning of the year I had a sock, a bed and no money. At the end of the year I had a sock, a bed and 20$.

Frogger, you are ignoring your collateral that has dropped in value by 10%. You are actually out the $80. Had you not secured your loan with that collateral, you could have dumped it for cash or gold. Your exampe assumes too much.

[Q Classic]

the nuke? as in one? good god almighty, you have no vision!

just imagine, we could eliminate all of our nuclear stockpiles AND solve the overpopulation crisis! why wait to have the dust settle after nuking baghdad? why not take out the chinese while we're launching nukes?

to change the world, you must have vision!

[Giancarlo]

Originally posted by Ned


Frogger, you are ignoring your collateral that has dropped in value by 10%. You are actually out the $80. Had you not secured your loan with that collateral, you could have dumped it for cash or gold. Your exampe assumes too much.

And what the heck are you trying to prove? You still have yet to prove 0% interest rates or below are possible (they certainly are not).

Again you prove nothing with big words. Frogger has a point.

You cannot secure loans with 0% interest or negative interests because that will cause a massive drain on financial institutions. The government would also need to bail out with loans and print money because demand is so high for money and it would only be squandered therefore actually causing hyper-deflation. Therefore proving your argument as hyper-moronic.

[KrazyHorse]

Ned the Financial Genius

a) Collateral is not always required for loans
b) Cash in a safety deposit box at the bank can be used as collateral. This is not negatively affected by inflation
c) The bank still isn't making any money. It would have been better off keeping the cash in the vault

[Ned]

Originally posted by Fez


And what the heck are you trying to prove? You still have yet to prove 0% interest rates or below are possible (they certainly are not).

Again you prove nothing with big words. Frogger has a point.

You cannot secure loans with 0% interest or negative interests because that will cause a massive drain on financial institutions. The government would also need to bail out with loans and print money because demand is so high for money and it would only be squandered therefore actually causing hyper-deflation. Therefore proving your argument as hyper-moronic.

Fez, I'm sorry, but we recently had and still do have 0% autoloans. This has not caused any collapse of anything. What it did was spur auto sales.

Ditto if we reduce short term business loans to 0%. It will spur business, create new jobs, etc. This is what the US economy needs.

[Ned]

Re: Ned the Financial Genius

Originally posted by Frogger
a) Collateral is not always required for loans
b) Cash in a safety deposit box at the bank can be used as collateral. This is not negatively affected by inflation
c) The bank still isn't making any money. It would have been better off keeping the cash in the vault

The bank actually makes money on the difference between what it pays for money and what it gets for loans. So, to some extent, your right. No one will place money in a bank at negative interest rates if keeping in a safe is possible.

What happens in this environment is that the economy simply collapses. No one is willing to make loans or to place their money in banks. The lack of monetary circulation feeds on itself causing further deflation. It is a vicious downward spiral.

We never really got out of the great depression until WWII and the massive government spending related to the war effort.

This in essence is what we need now. The central bank should essentially drop short term interest rates, and keep dropping them until we turn this thing around.

However, there is good news today. For the second time in a week the Dow is up nearly 500 points. Bravo!

[Kontiki]

Really simple economics...

Gotta throw my two cents in. Ned, you are confusing nominal and real (effective) interest rates. You're right about deflation, but that only affects real rates. The rates put forth by central banks (via monetary policy) are NOMINAL rates - ie. independent of inflation. The role that inflation plays is what determines REAL rates.

So, if the nominal rate is 2% but you are in a 5% deflationary environment, then yes, real rates are -3%. This is what is happening (and has been for some time) in Japan. The nominal rate in Japan has never touched zero as far as I know, although it is very close to it.

For a central bank to have negative nominal rates would be suicidal for the economy. As pointed out by Frogger and others, you cannot have negative nominal rates because a borrower would have to pay back less in nominal terms, which is always a real loss. (Sorry if this is a bit confusing). The bottom line is, no one will lend money and realize a loss on it on paper, purchasing power aside.

So what about 0% loans from car companies? Are they losing money because the purchasing power of their return declines over time? Not really. They're still making money on the price mark up, not to mention that retail vehicle sales are hardly their only source of income.

[KrazyHorse]

Kontiki's point about car loans is right on the mark. Ned, it's like me telling you that giving away oranges is not a sound business plan while you attempt to prove me wrong by showing me a successful business which gives away an orange with every computer you buy...