The Money Masters

[imstellar28]

Yall are quick to criticize at every step but do you have any ideas or solutions, or do you still think theres no problem with the US monetary system?

 

[Pardalis]

I just don't see a conspiracy, be it a "world" conspiracy.

 

[imstellar28]

It's tied to supply and demand, like any product. The prices (and the supply) rise with demand. As the supply catches up with the demand, the prices level out.

Is it possible that after the initial peak in demand, that the prices would level out to their previous values? I think people would notice if they suddenly had twice as much money but everything was twice as expensive...they wouldn't trust the value of the dollar and the system would collapse if it proceeded in that manner.

 

[chipmunk stew]

Is it possible that after the initial peak in demand, that the prices would level out to their previous values? I think people would notice if they suddenly had twice as much money but everything was twice as expensive...they wouldn't trust the value of the dollar and the system would collapse if it proceeded in that manner.

Of course they wouldn't. That's why the Fed was set up.

Are you proposing that there was no inflation when the dollar was tagged to the federal gold reserve?

 

[chipmunk stew]

Yall are quick to criticize at every step but do you have any ideas or solutions, or do you still think theres no problem with the US monetary system?

I don't think there's anything wrong with the Fed system, if that's what you mean.

I do think that personal debt has gotten out of hand and that legislation discouraging debt beyond one's means and discouraging predatory lending practices are a good idea (as long as the legislation doesn't create worse problems). I don't think that this problem was the conspiratorial design of a cabal of banking execs in collusion with the Fed. I don't think that this is the Fed's problem at all, as a matter of fact.

 

[VespaGuy]

Materials, construction, location, etc. Its not a magical number tied to the amount of money a citizen has...unless you are paying with magical money which is basically what the US dollar has become.

So why does a house in a Boston suburb cost twice as much (or more) than the exact same house in Erie, Pennsylvania?

 

[Hokulele]

There will still be banks around giving out loans but the interest will be lower due to decreased need, and the fact that they no longer get a third of the entire sum of wages in this country as an interest free loan for a year until April 15th. Also the loans will most likely not be for 30 years, but rather much shorter duration such as 5 years etc.

Your argument about interest rates and housing prices doesn't seem to be tied to reality. Why did housing prices skyrocket when the mortgage interest rate dropped drastically just over 5 years ago?

 

[jhunter1163]

My wife and I pay approximately one-third of our income in federal, state, and local taxes. While we may complain about this, the fact is that our tax money is used to educate children, keep our neighborhood relatively safe, maintain our roads, ensure that our senior citizens have at least some income and some medical insurance, and keep our borders safe from invasion by Liechtenstein. Are these things worth a third of our income? To my mind, they are.

My wife and I bought our home a few years ago (and a lovely one it is, an original 1849 farmhouse). Since we, like 99.98% of all Americans, don't have $200K lying around between the cushions of our couch (nor do we have rich relatives just waiting to lend us $200K) we had to get a mortgage from the bank. I did read the amortization schedule, and it was discouraging to see that, with interest, we were going to end up paying about double what we actually borrowed. However, that interest, and our property taxes, for that matter, are deductible from our income tax. (At least we get to stick it to the man a little bit that way). But, is getting to live in this swell house worth paying all that money over the next 30 years? Again, to my mind, it is.

My point in all of this is that there are BENEFITS you receive from your taxes, and there are BENEFITS from paying your mortgage.

And I'd like to dispose of the "tax-consumer" argument once and for all. Do you think that the CEO of General Motors will ever get back in benefits ANYTHING close to the amount of taxes that he pays? R.Mackey is a NASA scientist. A Federal employee. I'll gladly pay his salary out of my taxes just to watch him refute you people.

And finally, I work for a medical practice. I assure you that however much physicians make, they earn every cent.

 

[imstellar28]

My wife and I pay approximately one-third of our income in federal, state, and local taxes. While we may complain about this, the fact is that our tax money is used to educate children, keep our neighborhood relatively safe, maintain our roads, ensure that our senior citizens have at least some income and some medical insurance, and keep our borders safe from invasion by Liechtenstein. Are these things worth a third of our income? To my mind, they are.

You are mistaken in believe your income taxes cover those things. Your income tax does not make its way into any public services it goes straight to pay off the interest on the national debt.

The money used to educate your childen comes from property tax.
The money to keep your neighbor safe comes from sales tax.
The money to maintain your roads comes from the 42 cents a gallon gas tax.
The money to keep our borders safe is paid for by coporate taxes.

There are over 140 taxes which help fund public services but income tax is NOT one of them. The income tax is only 90 years old.

 

[VespaGuy]

Is it possible that after the initial peak in demand, that the prices would level out to their previous values?

Why would they?

A home-owner is going to get exactly what the market will bear. People will pay what they can afford (or at least what they think they can afford). You can bet that if the median income in my area jumps from $45K to $90K that I'll be asking a lot more for my house and so will everyone else. You'd be a fool not to.

The only thing that will drive down prices is when they reach a point where they are no longer affordable (which is what is happening right now). Until then, market demand will drive prices up. Will they come down? Yup... exactly to the point where people begin to buy again, which would be much, much higher than their current prices because the median income will be much higher.

Feel free to beieve in your Utopian society where people sell their homes for much less than their worth just because they are nice. It'll never happen. Ever.

I think people would notice if they suddenly had twice as much money but everything was twice as expensive...they wouldn't trust the value of the dollar and the system would collapse if it proceeded in that manner.

Notice? Don't you understand... they're the ones that'll be driving the prices up!

Look at what happened in the past 5-10 years. Housing prices sky-rocketed. Do you think anyone noticed? Of course they did. Rates were so low they were in bidding wars with each other, driving prices up and over the asking price. Real estate agents and builders were having a field day.

Was anyone complaining? No way. People were too busy bragging about the fantasticly low rate they got on their new home. So they paid a little over the asking price... big deal. They got in at the right time.

Of course, the prices kept rising because the demand was still there. Some people saw the rising market and quickly jumped in, afraid that they'd be priced out if the tend continued. The only reason it stopped is because the sellers priced themselves right out of the market.

This is exactly what would happen if everyone suddenly had more income. Exactly.

So are prices coming back down now? Yup, but very, very slowly. They'll never get back to where they were. They'll get to a point where people begin buying again, and they will stay there.

 

[imstellar28]

If you think its a benefit that you get to pay interest, then you are missing the point--wouldn't you rather just not pay income tax at all and not have to take out such a long, high interest mortgage?

Like I said before, you may feel free but you are 30% slave.

 

[Hokulele]

My wife and I pay approximately one-third of our income in federal, state, and local taxes. While we may complain about this, the fact is that our tax money is used to educate children, keep our neighborhood relatively safe, maintain our roads, ensure that our senior citizens have at least some income and some medical insurance, and keep our borders safe from invasion by Liechtenstein. Are these things worth a third of our income? To my mind, they are.

You are mistaken in believe your income taxes cover those things. Your income tax does not make its way into any public services it goes straight to pay off the interest on the national debt.

The money used to educate your childen comes from property tax.
The money to keep your neighbor safe comes from sales tax.
The money to maintain your roads comes from the 42 cents a gallon gas tax.
The money to keep our borders safe is paid for by coporate taxes.

There are over 140 taxes which help fund public services but income tax is NOT one of them. The income tax is only 90 years old.

You actually just agreed with jhunter's point. In his list, he claimed that the 30% was going to all taxes, not just income. You basically then agreed with his premise that his taxes pay for his services.

 

[T.A.M.]

TS:

Well I am actually proud of the Canadian Health Care System. How should I get paid then, instead of from the government? I provide health services to the people of my country, and they pay me, via their income tax, and other taxes, that they pay...I suppose the govt could pay me tax free, but they would simply reduce my pay by the amount I owe... what is the difference?

Their are pros and cons to both system, and as a result our taxes are higher here in Canada, but here in Canada, NO MATTER WHO YOU ARE, insurance or not, rich or poor, if you go to hospital, it is all paid for...by everyone.

And please, I do not want another spue of your "Tax Consumer versus Tax Provider" arguement.

TAM

 

[332nd]

You are mistaken in believe your income taxes cover those things. Your income tax does not make its way into any public services it goes straight to pay off the interest on the national debt.

The money used to educate your childen comes from property tax.
The money to keep your neighbor safe comes from sales tax.
The money to maintain your roads comes from the 42 cents a gallon gas tax.
The money to keep our borders safe is paid for by coporate taxes.

There are over 140 taxes which help fund public services but income tax is NOT one of them. The income tax is only 90 years old.

Ah so we just don't pay off the national debt.

 

[imstellar28]

In 1913 the rate for income tax was between 1-7% depending on your income. Today it could be upwards of 35% for federal alone.

So we have established that members here are ok being 30% and 45% slaves, and what point does it become not okay? 51%, more? For me personally, I am not okay with being even 1% slave.

 

[T.A.M.]

So where does the money come from to pay for housing and childcare for a single mother who can't find a job, but has three mouths to feed?

You have an answer for providing welfare where needed?

TAM

 

[332nd]

In 1913 the rate for income tax was between 1-7% depending on your income. Today it could be upwards of 35% for federal alone.

So we have established that members here are ok being 30% and 45% slaves, and what point does it become not okay? 51%, more? For me personally, I am not okay with being even 1% slave.

No you haven't, you've established that you see it that way. You're using slave to spur outrage and failing.

ETA: And suggesting we don't pay off the National debt.

 

[Donal]

You are mistaken in believe your income taxes cover those things. Your income tax does not make its way into any public services it goes straight to pay off the interest on the national debt.

The money used to educate your childen comes from property tax.

Except for the federal subsidies. This helps out lower income areas.

The money to keep your neighbor safe comes from sales tax.

see above

The money to maintain your roads comes from the 42 cents a gallon gas tax.

see above.

The money to keep our borders safe is paid for by coporate taxes.

There are over 140 taxes which help fund public services but income tax is NOT one of them. The income tax is only 90 years old.

We have also grown as a country since 1900. We've become a major superpower and the government has taken a greater role in its citizens' lives (medicare, social security, welfare, etc etc).

Do I think the government needs to be more responsible with money and cut down the spending? Yes. I'd say thats a common sentiment, even if most of us can't agree on where the cuts should be.

We also need to be more responsible as individuals. Luckily, my parents taught me how to be smart with money. Same for several other members.

If you don't like the system, cool. We can discuss it and try to find a better one. But lets not blame it on some invisible cabal.

 

[VespaGuy]

In response to this post:

Materials, construction, location, etc. Its not a magical number tied to the amount of money a citizen has...unless you are paying with magical money which is basically what the US dollar has become.

I asked:
So why does a house in a Boston suburb cost twice as much (or more) than the exact same house in Erie, Pennsylvania?

Also, I'm just curious Stellar, but what do you do for a living?

 

[imstellar28]

In response to this post:

I asked:
So why does a house in a Boston suburb cost twice as much (or more) than the exact same house in Erie, Pennsylvania?

Also, I'm just curious Stellar, but what do you do for a living?

1. Location

2. I don't see why it matters but I'm an electrical engineer