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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (187514)

12/30/2014 5:43:19 PM

From: Sweet Ol

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dvdw©

Read Replies (1) | Respond to of 206093

>>The cost of money is extremely low for the same reason that the price of other commodities are extremely low - demand is less than supply.Be nice then if you could explain to me why the demand for money is low...There is no mystery why short rates are low - they are set by the Fed. So the real question to my mind is why long rates are also low. QE has something to do with that, but it is clearly not all that is going on.

The demand for money (e.g. loans) is low because industrial capacity is running well below design capacity, there is no need to borrow to increase capacity. Credit-worthy borrowers don't seem to want to borrow except for drillers, some of whom are not so credit-worthy.

Bonds are a form of credit and most buyers do not want them at these prices. So the only buyer is the Fed and they buy at low rates to try to get companies to do something useful for the economy. The Fed wants US bond rates low so the government can continue to borrow cheaply.

None of that is working!

Blessings,

SOJ.

To: Biomaven who wrote (187514)	12/30/2014 6:20:57 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 206093

How much money do you want to borrow to start a new business right now? Second do you have the collateral needed to back the loan you want? If you, and people like you, were actually borrowing that amount of money - the price of money would be a lot higher. You can't think of a business you want to start right now because demand is low. I thought so. Perhaps you may want to begin collecting homes - it was quite a fashionable hobby in 2002 through 2008. In 2006 my housekeeper, who I pay $50 a day to clean my home, owned 7 homes with her husband who worked as a laborer in seasonal construction. Of course they don't own these homes today, because the below market interest rate on their teaser loans rose and apparently the rent together with their own modest income wasn't sufficient to make the loan payments and taxes. Who could have anticipated that? Clearly the demand for homes and home loans was quite high back in 2006. But owning a collection of homes has fallen out of favor amongst house cleaners, so mortgage demand is far lower as well. This has opened a great opportunity for you to begin your own collection of homes. You could either rent them or save them for later. They make a great gift.

To: Biomaven who wrote (187514)	12/30/2014 6:57:27 PM
From: Elroy Jetson	Read Replies (1) \| Respond to of 206093

I should mention the seven homes my housekeeper owned were in Los Angeles and certainly nothing was selling for less than $250k. So my housekeeper and her husband had created nearly $1.75 million in loan demand at a minimum, paying interest of $80k or more annually with a joint earned-income of probably less than $30k annually plus rents. And they also supported their two children on that income! Really quite admirable. If everyone made this same borrowing effort today, interest rates on savings accounts would certainly be back at 5% in no time flat.