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Just listened to Bitcoin Audible #765 with nostr:npub1h8nk2346qezka5cpm8jjh3yl5j88pf4ly2ptu7s6uu55wcfqy0wq36rpev and something finally clicked at the extent of the Ponzi. There is no market for houses or cars without borrowing against your future earnings. The market for $80k cars (if everything is paid in cash) isn’t enough to support production. But, the market for a $1250 per month for 60 months car payment is there.

The entire debt based economy is just pulling forward future demand, so it’s a matter of time before it gets out over its ski’s and falls forward into recession.

People make better decisions in a sound money economy. This helps explain why so many people are making so many bad decisions.

Dr. Hax 2y ago

I can't figure out which episode is number 765 (the website only seems to list titles, not numbers. So I'm responding without the full context...

I'm just going to set aside the fact that most cars are not $80,000 and focus on the point which is that many people are not able to afford the up front cost, being able to manage a payment over time. The reason for this is that, in America, cars have been necessary to do things like get to work, get food, and things that can't be put off for years while one would save up.

Now lets imagine a world with sound money. Would cars be cheaper in terms of the hours one needs to work to afford them?

Would the people making the vehicles get laid less in these same terms (hours needed to work in order to buy a car)? Would the steel and aluminum companjes get less? Would car companies take less profits?

And if nobody is taking an (inflation/deflation adjusted) pay cut, the car is still going to cost more money than many people have. The car makers would have to let people pay over time in order to move a large volume of vehicles and we're right back to where we are today with the onky difference being that the car companies are the lenders instead of credit unions and banks.

If someone can link me to episode 765, I'll listen to it in its entirety (even though they're *so long*) to hear where my explanation breaks down or at least diverges from others.

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Hal 2y ago

https://podcasts.apple.com/us/podcast/bitcoin-audible/id1359544516?i=1000627953798

I agree that while a car is necessary, the number of people that could/would buy $80k cars is WAY less than what we are seeing. They are paying $100k including interest that they would never pay if they couldn’t get 60 or 84 month terms.

So, probably the same amount of steel, fabric, etc in a $40k car and nearly all the utility compared to an $80k car, but the debt based lifestyle makes the decision strange.

Same for $200k humanities degrees, $600k townhouses, etc.

Dr. Hax 2y ago

nostr:npub1h8nk2346qezka5cpm8jjh3yl5j88pf4ly2ptu7s6uu55wcfqy0wq36rpev is that episode an Apple exclusive? It doesn't come up in the search on https://bitcoinaudible.com/

Dr. Hax 2y ago

Ah, okay. So if I understand correctly, it's a culture problem of people wanting nicer things than they can afford and debt being the mechanism that allows them to get these things (at least, temporarially).

In contrast, of they couldn't go into debt, they'd buy more durable and/or less expensive cars (and other things).

The way this ties to the fractional reserve banking system is that it's entirely based on debt (hence the "fractional" part of the name). Thus debt is just considered normal operations and not something that is necessarially bad.

Did I get that about right?

Hal 2y ago

Yes, something like that, and the reason that most people have been able to vastly outspend their means is the ~0% interest world we lived in. Now that it’s more punitive to get a loan, buying behavior has to change or if people aren’t running the numbers, they are going to erode their personal financial positions.

“Gradually, then suddenly” was Hemingway describing bankruptcy. When debt gets harder to refinance, lots of people are going to suddenly realize their position.