Debt really is wealth..... Apparently.

ash28

If debt is wealth and you don't have any debt does that mean you are bankrupt?

purch

An immensely interesting article in the FT today, that debunks the notion that excessive debt is holding back the UK economy

You really are going to have to stop believing EVERYTHING you read on the Internet Hamish old chap :eek:

Generali

HAMISH_MCTAVISH wrote: »

An immensely interesting article in the FT today, that debunks the notion that excessive debt is holding back the UK economy.

http://www.ft.com/cms/s/0/3f06ca5e-5d60-11e1-889d-00144feabdc0.html#ixzz1nPJGe5Yh


The article goes on to ask what changes when the author purchases a property at current house prices?

And notes that....

• UK physical assets remain unchanged: a second-hand house merely changes hands.
  
• UK financial liabilities rise as he has to use debt to purchase the home.
  
• The purchase price goes to the vendor so UK financial assets also rise.
  
• For the UK as a whole, the transaction raises both household debt and financial assets.

Also of interest, since 1995 household debt has risen from 104% of household income to 173% of household income, but household financial assets have risen more, from 360% of income to 442% of income.

So apparently, debt really IS wealth.

Good to know.;)

I think that the author has simply rediscovered double entry bookkeeping by working it through from first principals. Assets = liabilities by definition so if you increase the value of one, the value of the other rises.

It's oversimplified though because the writer doesn't follow the transaction through the banking system. There will be an increase in assets and liabilities there and quite possibly an increase in the money supply too.

Thrugelmir

Generali wrote: »

I think that the author has simply rediscovered double entry bookkeeping by working it through from first principals. Assets = liabilities by definition so if you increase the value of one, the value of the other rises.

Though is missing the key entry........ "Cash is King".

Somewhere along the road the most basic of fundamentals has been hidden by a fog.

Generali

Thrugelmir wrote: »

Though is missing the key entry........ "Cash is King".

Somewhere along the road the most basic of fundamentals has been hidden by a fog.

Even cash is a liability if you're a Central Bank.

Jimmy_31

RenovationMan wrote: »

He won't, he's a sockie and by definition he can't give away his real location because he doesn't exist.

Ive already said why i wont say where i am from.

Do you make these sock puppets yourself and then take pictures of them.

Im beginning to think you are a sock puppet yourself.

RenovationMan

Jimmy_31 wrote: »

Ive already said why i wont say where i am from.

You don't need to say why you won't say where you live, we already all know it's because you don't want to undermine your daft "Prices are down 30% today in my area" nonsense posts. :rotfl:

Jimmy_31

RenovationMan wrote: »

You don't need to say why you won't say where you live, we already all know it's because you don't want to undermine your daft "Prices are down 30% today in my area" nonsense posts. :rotfl:

Ive already said it.

I said it months ago when somebody asked me why i didnt want to say where i am from.

Why do you NEED me to be a sock puppet ?

What has changed all of a sudden:)