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The Forum > Article Comments > Will the cash splashes lift the economy? > Comments

Will the cash splashes lift the economy? : Comments

By Nicholas Gruen, published 13/3/2009

Australians owe nearly $350 million on credit cards. Less than 15 per cent are paid off each month, and about 70 per cent accrue interest.

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Economics 101. the real truth.
What happens when the consumers are the producers?
Every retailer wants his/her customers to be rich. Duh. Of course sellers want buyers to be rich; this almost goes without saying.
At the same time, those same retailers want producers to be poor (cheap). The poorer the producers are, the more affordable the retailer's saleable goods will be.
So what happens when producers are also consumers?
This is where globalisation steps in. Back in the sixties, we had several heavily industrialised (and at the time, poor) nations -Japan, Singapore, Taiwan- just dying to manufacture goods for us. Why would we bother manufacturing our own goods, when we can pay someone else to do it for us?
A funny thing happens when you keep putting your hand in your pocket, to pay someone else.
They end up with all your money.
So what do you do, when after decades of giving all your money to your trading partners, they end up richer than you are?
You come back to the same problem. What do you do when your producers are also your consumers.
You offer them credit cards, of course. That way, your poor producers can act like rich consumers, without actually being rich consumers.
This tactic has the added benefit, that not only can poor producers pay for your goods, but you can actually make them pay for the goods 2 or 3 times over (at 19% interest).
But of course, this is only a short term solution. What happens when all the credit cards are maxed out?
Well, in that situation, what else can you do?
“NOTHING TO PAY, FOR 6 MONTHS!”
“NOTHING TO PAY, FOR 12 MONTHS!”
As I recall, the last one I saw offered nothing to pay for 3 years. Where does it end?
PAY NOTHING! (we'll bill your children).
YOUR CHILDREN WILL PAY NOTHING! (we'll bill your grandchildren).
Nicholas Gruen asks:
“Do people who are paying between 11 and 20 per cent interest sound that rational to you?”
More than 90% of Woolworth's Supermarket customers use a credit card.
Posted by Grim, Friday, 13 March 2009 8:05:52 PM
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Your remarks about people with Credit Cards at 25% .

You need to insert some feeling into your attitude toward these people .

You have failed realise what people have to do to make out when they find wages don't meet requirements . 5 kids all going to a new school uniforms & books plus shoes and socks roughly $5600 . Shortly after starting an additional 550 for books . Remember this is happening immediately after Xmas .

Back awhile we had a disaster with our washing machine , purchased a Westinghouse for $900.

Our income is $37000 .

Our Credit card is maxed out at 17,000 .

We spend $200 per week at ALDI , $80 plus at Safeway , $100 plus Shell , HBA Top Cover $ not sure , all paid Bankcard Debit .

We only use credit card because there is no other option .

Our problem is not stupidity , it's the Market sets the prices adjusted to "What the People will pay" , corrupting this estimate is millions of Credit Cards maxed out at 13,ooo (I think thats the correct figure ?)

How can we beat the system ?
Posted by ShazBaz001, Saturday, 14 March 2009 1:29:22 PM
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ShazBaz001,

I am sorry that things are as tough for you as they obviously are. Because things are tough, because the financial decisions you make are as difficult for you as they are, it's crucial for your welfare, much more than for many, for your financial decisions to be hard headed and in your interests.

Right now you are weighed down by an interest bill of $3,400 per year if you're paying 20% credit card rates. First thing you may be able to do is reduce it to around 11% if your credit rating is still OK. Then you need to get it down. That's very hard, I know. But it's the only way you get back the thousands of dollars its costing you now. If you are paying your card now and you halve the rate, you can at least put $100 or so additional into repaying your credit card each month, and work on getting the monkey off your back.
Posted by Nicholas Gruen, Sunday, 15 March 2009 4:34:38 PM
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The figure is over inflated.I use the credit facitity on my card to reduce EFTPOS charges but it is actually a debit card transaction.The money leaves my account immediately.

The more important issue is that we do not need the international Reserve Banking Cartels generating credit.They just generate money from cyber space and loan it to us at interest.Our own Res bank can do likewise with more responsibly and we can pay less interest plus reduce our balance of payments deficit.

This debt trap has been a pyramid scheme instigated by the Res Banks of the world.We don't need the IMF World bank or the Bank of International Settlements.They are nothing but parisites on the real productive economy.
Posted by Arjay, Sunday, 15 March 2009 4:45:16 PM
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Our income is $37000 .
Mate, I hate to state the obvious, but do you really think you can have 5 children and support them on $37K per annum, or is the funding of YOUR CHILDRENS financial needs simply someone elses duty.

Now come clean here, how much per year/month/week does your family collect TAX FREE from other tax payers,(some call it the goverment but it really isn't) many of them working two jobs so they can also support thier own kids after paying something towards others kids.

How much have you recieved, if any, from the baby bonus. If anything, what did you do with it?

How much are you likely to receive from the latest hand outs. What do you intend to do with that money?
Posted by rehctub, Sunday, 15 March 2009 8:42:16 PM
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I would like to know were friedman gets his ideas. Does he do any research? Where are his statistics? Where are the reasonings for coming to his conclusions?

I find his ideas (and a lot of economic ideology) to be nothing but self serving, wishful thinking, ravings with absolutely nothing to do with real people and the way they act.

"they try to smooth their consumption over their lifetimes given their current wealth and their anticipated life income and circumstances."
What a load of toss. First who can possibly know or even guess at their "anticipated life income and circumstances" let alone allow it to effect their day to day spending. It just dosent make sense. People are impulsive, emotional and irrational. Thats why we have an obesity problem. Thats why people dont realise how stupid credit card debt is. Thats why we keep voting into government the same fool ripoff merchants that fleece us time and time again.

Economics is a giant conjob designed by the wealthy for the wealthy and with the aim of retaining us as their slaves.
Posted by mikk, Sunday, 15 March 2009 10:06:54 PM
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ShazBaz001,
What's up mate, cat got your tongue! Or do you simply realise you are on a pretty good deal considering they are YOUR KIDS and YOU DON'T HAVE TO PAY FOR THEM.

I just wish the walfare recipients that I support would STOP WINGING.

Remember, welfare cost you NOTHING!
Posted by rehctub, Wednesday, 18 March 2009 6:33:16 AM
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