JPF Home Page Forums Stop The Bailout

Scott,

I'm no economist either, but I agree with almost everything you said.

I only disagree with two points. One where I disagree is that the banks, lending institutions, and speculators most certainly made money. They made money by reselling the worthless paper. They sold that stuff all around the world. My mortgage has gone through five different companies since we bought our house. Along with my mortgage which is good paper (we can afford our house and have never once in 20 years been late with a payment), they sold many bad loans (people who couldn't afford the houses and are late on their payments). Then there were the short sellers, they've made a bundle on this. Of course now, the smart ones, the smart real estate flippers, builders, bankers, traders, and speculators, have cashed out. So who pays for it? The poor? How do they pay for it?...they're poor! No, it's the 401K.

Another is about the value of stock. Using your example, you say the $10 value just stays the same. No, it really doesn't. There's inflation, there's risk, and there are other relative occurrences in your life that devalue that $10. For one thing, the purpose of long term investment is to make your money increase in value. If you invest long term, not in single stocks, but with many different investments (I go with five different mutual funds: an agressive growth fund, a cautious low yield fund, a "green" fund that focuses on conservation and environment, a foriegn market fund, and a fund tied into the S&P 500) Then it's a fairly safe bet that you'll make money over the long haul. When the market goes down, you've lost that earning power.

But there's never, in the history of the stock market, been a 12 year period that lost money. That includes the Great Depression. If things do crash and get bad for longer than ten or a dozen years, then money will mean nothing, nor gold, you'll need to be able to entertain the war lords and know how to hunt and fish. I can do that

Don't depend on the government.