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I'm vexed by debt in a SHTF scenario

1. If you owe people money and the system collapses, then who cares? Where will you send the payment to?, does money even exist?, even if you have the money will anyone be there to accept it?

2. So I have made a commitment to pay my bills, if nobody is there to collect them am I off the hook?

3. The Federal Reserve system is a fiat money system created and gamed by a few elite families and if their currency fails what the heck do I care, you should lose your investment.

4. If Hyperinflation hits almost anyone can pay off their mortgage with a weeks wages, that would be cool.

5. If I have a contract due to me, like selling a house for XX per month at XX percentage rate, how hard will it be for someone to pay off their $200,000 balance when bread is going for $125,000 a loaf? Is this fair?

The historic fact is when the currency is defaced, people that have savings get screwed, people that owe money get rich.

Something to think about.
 

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These are just one man's opinion, so take them as such...

1. If you owe people money and the system collapses, then who cares? Where will you send the payment to?, does money even exist?, even if you have the money will anyone be there to accept it?
If I owe people money, I care. That is a commitment that I made and I honor my word. Even if they are not around to accept it, I will keep it for them in case they come back. The one exception to that rule is the government. If I owe taxes when the dollar collapses, piss on 'em! I figure they are stealing money from me in the first place since I did not enter into a voluntary agreement, they just said if I work hard and am successful, I owe them some changing percentage.

2. So I have made a commitment to pay my bills, if nobody is there to collect them am I off the hook?
Nope, they may come back.

3. The Federal Reserve system is a fiat money system created and gamed by a few elite families and if their currency fails what the heck do I care, you should lose your investment.
Yep - pretty much.

4. If Hyperinflation hits almost anyone can pay off their mortgage with a weeks wages, that would be cool.
The way they are fiddling with the monetary system up right now, you may be able to pay off your mortgage for less than a cup of coffee at Starbucks in a few years.

5. If I have a contract due to me, like selling a house for XX per month at XX percentage rate, how hard will it be for someone to pay off their $200,000 balance when bread is going for $125,000 a loaf? Is this fair?
Sorry to get on my high horse on this one, but your question "Is it fair?" is a hair trigger for me. :-D

For me, "fairness" is the exact opposite of "justice". Socialism is "fair" since everybody is equally miserable. Laissez-faire Capitalism is "just" because you receive your due based on your own skills at production and negotiation at the time the transaction took place. Is that "fair"? - Absolutely not! You may be more efficient at making things than me, or you may just be a better negotiator. Either way, you got what you deserved because you were able to find a willing buyer to pay a higher price than I was. In the case you outlined above, your buyer was a better (or luckier) negotiator than you. Oh well...

On your larger point, that is why I hate this Corporatism-Socialism hybrid system we are living under now so much. It is neither "just" nor "fair". Inflation punishes the savers and producers and rewards the borrowers and looters. Add to that a government that has different sets of rules for people that have the "power of pull" and the rest of us, and you have an environment that is tantamount to soft-slavery.

As an aside, if you do end up trading that house for a loaf and a half of bread, grab you wife and bring her (and the bread) by our place. Mrs. Inor makes a pretty mean French Toast and I stuffed some homemade breakfast sausage not too long ago that is good enough to make you do crime. At least you will get a meal to remember out of the deal. :-D

P.S. If you really want to see me go over the top try starting a post about the virtues of the story of Robin Hood. I think that is one of the most evil stories ever written.
 

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Id be hard pressed to express my thoughts any better on this subject than Inor did.

On point 4 though...remember, that only works on things where you have a fixed rate of interest. You will be in deep doo-doo if you have any debt that is based on say 5% interest plus the prime lending rate. As the prime rate rises through the stratosphere so will your over all interest rate. Other than a mortage or Car loan this is how credit cards often work for most and where people have the most debt tied up outside the previous two. This is where most people will get pummeled to death, that and the rapidly rising cost of goods and services that are needed on a daily basis.

This is why I am scrambling to reduce my debt as fast as I can so I dont get caught up as badly in this soon in coming train wreck that is all but inevitable. It hasnt been easy and I got two credit cards to go and I will have that 600 lbs Gorilla off my back! What I have paid in interest alone in just 12 months with a increadibly low interest rate that I have probably exceeds what I owed in principal alone. When you look at it from that stand point and the S hasnt HTF yet, you can then see just how bad debt hobbles you and bleeds you dry. While I am paying well over what my minimum is, if I had no debt, it would be like a 1600.00 a month pay raise doubling my disposable income! Imagine what you could accomplish if your "pay check" doubled over night today?

Just because the economy tanks tomorrow doesnt mean all your debt will go to the way side, youll probably get out of some of it. Just cause the interest rates go up doesnt mean your pay check will go up as well or as quickly to allow you to keep pace. Yes its unfortunate that those who worked hard and saved money in the bank will loose a lot too. This is one of the reason Gold and Silver has been very attractive of late vs saving money and depositing it in a bank account every pay day. Look back to the Jimmy Carter years to see what I mean as an example.
 

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It seems to me that to build ones financial portfolio based on what might come about is the height if absurd foolishness. One might as well strip naked and stand atop a hill looking up like so many apocalyptic Millerites have done down through the ages.

Take on what reasonable debt is required, and as little as is necessary -- what can be managed in all financial epochs -- and prep with the rest of ones finances so as to be sustainable and sufficient no matter what comes next. To do otherwise is only to prep for ruin.
 

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I guess to me it is one of those things that will work itself out.

If I owe the debt, . . . and can pay it, . . . I'll do just that.

On the other hand, . . . if the economy collapses to the point that mail doesn't get delivered, PayPal don't work, etc., . . . I'm not vacating my hooch to go trapsing all over the place just so I can claim the moral high ground that "I PAID my bills."

I'll make an honest attempt to settle all debts, but when the stuff is hanging off the fan blades, . . . I'll probably have more important things to worry about than the monthly bills.

May God bless,
Dwight
 

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I am getting to the age, that 401k and retirement is having a lot more meaning in my life than it used to. I worked many a year for one company and have built up a very modest nest egg. If the dollar devalues, or for any other reason my nest egg is no longer, I guess I'll have to do whatever I can for an old man and his wife to survive.
I have considered turning my money into tangible things, but that is a big gamble with the money that is to do me and my wife the rest of our lives, a gamble I am not yet ready to take.
 

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Well, since none of us are time travelers, no one knows for sure what the future holds. So what follows is pure opinion coupled with some understanding of what the true stakeholders will try and protect. By that I mean the banks, merchants, realty owners, tax authorities and government officials will seek to preserve as the status quo.

I do not think we will see a total economic collapse in America. There simply is too much at stake that has been financed in a country that operates off of finance capitalism. There is a lot of secured debt, meaning debt for which someone has given collateral to secure repayment of the loans. Creditors have the right to seize and sell the collateral (foreclose on the house and auction it off using sheriffs to ensure the collateral can be recovered). Secured creditors expect to get paid; and sometimes they pledge such secured debt to borrow other money themselves or sell the commercial paper outright at a discount, and the new secured creditor will want to get paid. That system works very well for the people who set up that system for their own benefit. So that is not likely to just go away voluntarily (nuclear war could take it out) but short of that, the finance capitalists have the police power and even the military backing up their system of monetizing secured debt to realize their return on investment - payment in full of the original principal (loan amount) and all interest that is owed on the loan. Absent some catastrophic worldwide event that literally destroys this international finance capital regime, it is in power, and it is not going away.

So, having your debt cancelled by meteor strike probably is wishful thinking, at best.

Think it through - you believe the system will collapse. You decide to max out your credit cards, and buy houses and cars until the banks cut off the money flow. You wait for the collapse you are sure will come, and it does not materialize. So now you either pay the man or the man takes your stuff, sells it off, and sues you to collect on any deficiency between what you owed the man and what the collateral sells for at auction. Simple as that, and bad for you. So much for crystal balls for financial planning....

And you cannot rely on what happened in other countries or in the past. The creditors learn from past mistakes and change the laws to avoid similar outcomes (why people can no longer discharge credit card debt by filing for bankruptcy protection after fully furnishing their house). And those other countries don't have a currency that is the reserve currency internationally. Mexico can print more pesos but they are just paper if no one uses them for transactions internationally. The dollar is a completely different medium of exchange as a result. If it is tendered to pay debt, people will accept it as long as it has its perceived value status. And I do not see that changing in my lifetime.

So, my view on debt is: it sucks. I hate owing money to a bank. I am not going to get into a personal finance exposé here, but it is a great feeling not to owe money to anyone.

Being debt-free should be everyone's goal, and is the new American dream. That is how you really stick it to the man.

The people at the top who set up the pyramid scheme are not going to let it fail - they have too much to collect on still at stake....

My two cents, anyway, not collateralized by the way....
 

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I recently took on a large debt for a large parcel of land. I never really thought about the fairness issue in hyper inflation since I don't know the people I borrowed the money from (a bank). As long as I ever had debts I tried to mirror them with PMs in case of rapid or hyper inflation. I planned in such case to sell the PMs and pay off the debt. But would that be far to wipe out a $200k mortgage with, say 200 ounces of silver? Assuming silver reaches $1k an ounce in a state of hyper inflation. I would have trouble doing that to a family or man I bought the land from if they'd carried it, but I have less trouble doing that to B of A.

There are many who have said in the case of SHTF if credit cards are in hand and working they will max them knowing repayment isnt going to happen. I find that kind of criminal. When I signed the note to buy our neighbors property I fully expected to to pay the $200k loan off in less than 10 years.
 

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Enjoy, it is not really a bunch of stuffy British economists, plus it is only 3 minutes long.
 

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I guess I'm lucky. My wife and I have only one obligation, an auto loan to pay on. By not having any other debts to speak of, I have been able to put money into the things necessary in life and survival.
 

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I've clicked your link and will try and read after posting this, but I disagree debt is bad. If we are going to "inflate" the dollar to pay for our obligations in the future then debt is going to be a darn good thing. It raises and eithical question as I noted if we hyper inflate, but if we simply "suffer" 1970's era 10% type of inflation debt is a great investment.

Debt is bad. It is bad to owe, and Keynesian debt is what got us in this bind in the first place.

This is a long read - about seven minutes. It's worth the time.

Impending Financial Collapse ? The Grand Finale: Here Is What Is About To Happen To You?An Economic Love Story, or Fifty Shades of Green? |
 

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I almost stopped at the point of warehousing $100 bills - they've done that for 40 years so to suggest its something conspiracle now - doesn't work. Anyone in manufacturing knows you make all you can before switching over to make something else - which costs money. There are lot of the "Fed" aspects my brother tries to sell me all the time I don't buy into - sorry.

Debt is bad. It is bad to owe, and Keynesian debt is what got us in this bind in the first place.

This is a long read - about seven minutes. It's worth the time.

Impending Financial Collapse ? The Grand Finale: Here Is What Is About To Happen To You?An Economic Love Story, or Fifty Shades of Green? |
 

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I've never been in debt in my life, there must be something wrong with me (sniffle).
The Powers try to brainwash people into thinking it's perfectly normal to be in debt, they even tried it with me when I was in my bank last year.
"Hello" said a smiling woman teller, "we'll get you fixed up with a Credit Card".
"I don't need one" I replied.
"But Credit Cards are much better and useful, everybody needs one nowadays" she said.
So for my amusement I let her waste 25 minutes of her time doing paperwork and computer entries to get me "fixed up", then when the CC arrived through the post a few days later I cut it up and binned it without activating it.
Jesus said "The world wants you to dance to its tune" (Matt 11:16/17)

I don't dance..:)
 

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I always subscribed to the idea and was taught that if you go into debt you pay it off. I'm in my early 30's and have only had 3 cars. All have been paid off. I've had credit cards, use them, pay them off. Just how I was raised and what you do. As someone said earlier, if you agree to the terms you need to stand by them.

Now......when I bought my home in hopes that the housing crash was over (it continued to go further) I started changing my mindset. This wasn't something I agreed to, it wasn't something that I did, and now my house that I only planned on staying for a couple of years now has me locked in at 50,000 upside down. For once I actually thought about walking away. My family grew from 2 kids to 5 kids and a 3 bed 2 bath was not cutting it and it was the governments fault for the housing market crash yet I'm suffering. Now I still hung on to the, I agreed to it, I'll pay it. However, when things started getting tough my thoughts started changing as I need to take care of my family first before I take care of a bill brought down by the governments and banks screwing up of the housing market.

We still have the house and going to try and rent it while we just bought our 5 acre land we are going to live off of and go into a self sustainable lifestyle. (The land we paid cash for) but it still has me questioning at what point do change from fighting an uphill battle to move on. I know a family who just stopped paying their house payment for 2 years and the government and bank ended up lowering their payments and forgave the 2 years! Yet, here i'm paying top dollar? Slightly frusterating. Sorry for the rant lol
 

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This is a good thread. The OP's question was whether debt was good or bad. I would have to say it depends. I have been in both situations having owed lots of money and now being near debt free. I would say for me, I like being near debt free better. Unless you are independently wealthy, some debt is necessary IMO to expand your business. The only personal debt that is "good" would be on real property, with a fixed low interest loan. This is especially true if interest rates rise dramatically. All consumer debt is bad - credit cards (unless paid off in full monthly), car payments, etc.
 

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I think maybe we have forgotten the people who have been evicted from the homes in the last few years. I'll bet they aren't too in love with debt.
If you owe, you don't own.

On the other hand, recent history has illustrated that debt is a good thing if you are the bank. If someone parks currency in the bank, and the bank runs into trouble, they don't have to repay your investment and the government can take that currency to help bail out the bank.

I think the Biblical way is best.
 

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There is another side to the equation though.

Right now I enjoy a home that is debt free. However just before I paid it off I had capital available. What could I do with it? Buy PMs, buy land, where am I going to live?
I could have rented my current home for $1100 a month, or I could put my capital into a sizeable down payment and have a mortgage of $525 a month. Even with taxes I
would not incur as a renter I'm at $700 a month and the interest I can write off from income (if I had it). So I saved $400 a month, $4,800 a year, and from a $30,000
capital investment - so yes the debt then was very good for me.

I think maybe we have forgotten the people who have been evicted from the homes in the last few years. I'll bet they aren't too in love with debt.
If you owe, you don't own.

On the other hand, recent history has illustrated that debt is a good thing if you are the bank. If someone parks currency in the bank, and the bank runs into trouble, they don't have to repay your investment and the government can take that currency to help bail out the bank.

I think the Biblical way is best.
 
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