To: Crony who wrote (31577 ) 5/19/2005 7:32:24 PM From: GraceZ Read Replies (1) | Respond to Feeling rich and being rich are two different things. The overriding fundamental principle of economics is that you can't get something for nothing. Borrowing to consume (using your house as an ATM) is simply bringing future consumption into today. If consumption in the future is more expensive you might be personally better off doing that, in fact this has been the thinking in the housing market, that future housing prices will be higher than today so I'd better buy now or risk not being able to buy tomorrow. But the bills come due and are paid down with real wages and what works for you on a personal level doesn't have the same macro effect. Houses are about the only consumption item in the last five years which has covered the cost of borrowing to buy it, things like plasma TVs and SUVs are getting cheaper on a real basis so borrowing for them means you pay more for them now than in the future. You are better off buying them with savings because when it comes to electronic toys the future is always cheaper.price in the future then the interest would have been paid for with increased productivity. Increasing productivity is the only real way to increase a country's collective wealth.
