Jamie Diamon says: An Economic Hurricane is on the Horizon.

Mai72

Lifer
Sep 12, 2012
11,055
1,398
126
High inflation, high gas prices, the war in Ukraine are going to contribute to a very severe economic downturn, and many Americans aren't going to be prepared. Its going to be interesting if we dip into a recession. How severe is it going to be? Will the average Joe and Jane be able to weather the downturn. Are people saving? How many people have at least a 6-month money cushion just in case if something tragic comes up. And what about the crypto bros? Will they go bust. As for me, I'm paying off all of my debt. I want as little debt weighing me down, just in case Jami is correct. And, what about Peter Schiff? Seems like he does nothing but fear monger. He was correct about the 2006-09 housing crash. Will he be correct about the next crash which he has said is going to be much worse. Will the economic hurricane turn into a tsunami? Only time will tell.

 
Last edited:

fskimospy

Elite Member
Mar 10, 2006
76,527
32,005
136
I tend to think less than zero of what active participants in the market say about the market. He could be 100% right, who knows, but if he is very confident of the correctness of his position and he thinks this is novel information that other people don't think then by releasing it he's actively harming his trading desk.
 

Pens1566

Diamond Member
Oct 11, 2005
8,522
2,191
136
High inflation, high gas prices, the war in Ukraine are going to contribute to a very severe economic downturn, and many Americans aren't going to be prepared. Its going to be interesting if we dip into a recession. How severe is it going to be? Will the average Joe and Jane be able to weather the downturn. Are people saving? How many people have at least a 6-month money cushion just in case if something tragic comes up. And what about the crypto bros? Will they go bust. As for me, I'm paying off all of my low interest debt. I want as little debt weighing me down, just in case Jami is correct. And, what about Peter Schiff? Seems like he does nothing but fear monger. He was correct about the 2006-09 housing crash. Will he be correct about the next crash which he has said is going to be much worse. Will the economic hurricane turn into a tsunami? Only time will tell.

Why pay off low interest debt though? Unless there's some 3D chess I'm missing here.
 

Mai72

Lifer
Sep 12, 2012
11,055
1,398
126
Why pay off low interest debt though? Unless there's some 3D chess I'm missing here.
I should had said I'm paying off ALL debt. I'm currently going thru Dave Ramsey's money snowball. In his plan he doesn't like any debt.

He says that all debt is bad. I know that many people here are going to disagree with this advice. But, having zero debt feels good.
 
  • Like
Reactions: Leeea

Mai72

Lifer
Sep 12, 2012
11,055
1,398
126
Personally, I've been doing the opposite and started by paying off the highest interest debt first....but to each his own, I suppose.
I fixed it. I meant all debt. Both high and low interest loans. Sorry for the confusion.
 
  • Like
Reactions: Leeea

Zor Prime

Senior member
Nov 7, 1999
455
64
91
Having devoted a decade of my life under this guy I can say he's not an idiot. The middle class and below are getting crushed under gasoline prices alone.

Some examples: compared to a couple years ago, I know people who have gotten second jobs just to pay for gasoline to get to their usual job. I know others who have done things like bicycle to work and leaving their automobiles parked. They're all trying to do what they can and we haven't even reached the apex of this shitshow.

While I'm fine I do have friends and family of many walks of life. I've planted a garden for the first time in forever simply due to being disgusted by the prices at the grocery store -- don't really need to, it's a principles thing for me. The fact is that I did where I wasn't compelled before. I'm a barometer of fuckary, if you find me gardening then something is awry.

While I'm unsure how bad things are going to get, they're currently bad and getting worse per day.

But it's not all bad for everyone, if you're an investor. I'm diverting more and more disposable income into the market as it drops.
 
  • Like
Reactions: Brovane

Leeea

Golden Member
Apr 3, 2020
1,899
2,489
106
I'm paying off all of my debt
Rate of inflation: 8.3%
Mortgage rate interest: 3.5%

Why would you pay off any debt below the rate of inflation? Inflation is reducing your dept load by 4.8% per year.

It will be 4.8% cheaper for you to pay off your dept next year, then this year.
If the rate of inflation continues, 9.6% cheaper in two years.

Just how do you think the US pays off its national dept? We inflate* it into nothingness. There is nothing stopping you from doing that with your personal finances.

-----------------------------------------

Think about government bonds, in high demand at less then 1% interest. We have 30 trillion in dept. 8.3% - 1% government bond interest = 7% inflated away.

The US government will inflate away 2 trillion dollars of dept this year. Another way of looking at it, the US will pay for the entire cost of the war in Iraq ( 1.9 trillion ) through inflation in one year. Some people call this a flat tax, but what is really happening is people with savings accounts are being taxed with the payments going to people with mortgages. The biggest mortgage holder being the US treasury.

Rich people pay for things by taking on debt for a reason. Debt at low interest rates is free money.

-----------------------------------------

If you think about it, the best way to equalize this for normal people is to raise the minimum wage. However, that is only happening in Urban ( democrat ) areas. In rural ( republican ) areas, people decided they do not want minimum wage increases this time around. So they are being left behind. Who are we to argue with them?
 
Last edited:

Zor Prime

Senior member
Nov 7, 1999
455
64
91
He says that all debt is bad. I know that many people here are going to disagree with this advice. But, having zero debt feels good.
Good on you. Get it to where you can charge everything on a credit card for rewards and pay it off before interest hits and you're gold. Keep at it!
 
  • Like
Reactions: Leeea

Pens1566

Diamond Member
Oct 11, 2005
8,522
2,191
136
I should had said I'm paying off ALL debt. I'm currently going thru Dave Ramsey's money snowball. In his plan he doesn't like any debt.

He says that all debt is bad. I know that many people here are going to disagree with this advice. But, having zero debt feels good.
Eh, Ramsey is a bit extreme in his views but there is a lot of good advice especially if you're not super vigilant or don't typically pay attention to details. And I'm not saying that's bad either. IIRC, he's completely against using any CCs as well. Which is just nonsense as long as you pay them off every month. In fact, the right cards can actually be used to your advantage ... greatly.

And as others have said, there's really no point in paying off debt below a certain %. If your mortgage is like 3%, it makes no sense at all. Especially as rates go up.
 
  • Like
Reactions: Leeea and herm0016

fskimospy

Elite Member
Mar 10, 2006
76,527
32,005
136
Having devoted a decade of my life under this guy I can say he's not an idiot. The middle class and below are getting crushed under gasoline prices alone.

Some examples: compared to a couple years ago, I know people who have gotten second jobs just to pay for gasoline to get to their usual job. I know others who have done things like bicycle to work and leaving their automobiles parked. They're all trying to do what they can and we haven't even reached the apex of this shitshow.

While I'm fine I do have friends and family of many walks of life. I've planted a garden for the first time in forever simply due to being disgusted by the prices at the grocery store -- don't really need to, it's a principles thing for me. The fact is that I did where I wasn't compelled before. I'm a barometer of fuckary, if you find me gardening then something is awry.

While I'm unsure how bad things are going to get, they're currently bad and getting worse per day.

But it's not all bad for everyone, if you're an investor. I'm diverting more and more disposable income into the market as it drops.
How much do you guys drive every day?! Gas usually comprises about 5% of people’s expenditures and prices have risen by about 50% year over year. Are people really getting second jobs because of a loss of 2.5% of income?

I mean maybe this is a problem if someone has a giant truck and has a long commute to work but also in those cases this is people paying the piper for bad life choices.
 

Fenixgoon

Lifer
Jun 30, 2003
29,602
6,186
136
Having devoted a decade of my life under this guy I can say he's not an idiot. The middle class and below are getting crushed under gasoline prices alone.

Some examples: compared to a couple years ago, I know people who have gotten second jobs just to pay for gasoline to get to their usual job. I know others who have done things like bicycle to work and leaving their automobiles parked. They're all trying to do what they can and we haven't even reached the apex of this shitshow.

While I'm fine I do have friends and family of many walks of life. I've planted a garden for the first time in forever simply due to being disgusted by the prices at the grocery store -- don't really need to, it's a principles thing for me. The fact is that I did where I wasn't compelled before. I'm a barometer of fuckary, if you find me gardening then something is awry.

While I'm unsure how bad things are going to get, they're currently bad and getting worse per day.

But it's not all bad for everyone, if you're an investor. I'm diverting more and more disposable income into the market as it drops.
And how many people drive fuel inefficient vehicles an hour each way?

Don't get me wrong, high gas prices do hurt middle/lower classes more, but some of it is because of lifestyle choices that are now biting them in the ass.

Of course, that's easy to say when the price of gas is essentially irrelevant to me.

Edit: ninja'd by mere seconds!
 

fskimospy

Elite Member
Mar 10, 2006
76,527
32,005
136
And how many people drive fuel inefficient vehicles an hour each way?

Don't get me wrong, high gas prices do hurt middle/lower classes more, but some of it is because of lifestyle choices that are now biting them in the ass.

Of course, that's easy to say when the price of gas is essentially irrelevant to me.

Edit: ninja'd by mere seconds!
I remember being in San Diego in 2008 when prices were over $5 a gallon, which is about $7 now and I was making about $40k a year. It definitely sucked but I didn’t go out and get a second job or anything.
 
  • Like
Reactions: Leeea

Pens1566

Diamond Member
Oct 11, 2005
8,522
2,191
136
And how many people drive fuel inefficient vehicles an hour each way?

Don't get me wrong, high gas prices do hurt middle/lower classes more, but some of it is because of lifestyle choices that are now biting them in the ass.

Of course, that's easy to say when the price of gas is essentially irrelevant to me.

Edit: ninja'd by mere seconds!
Yes, it's always the "It cost me $219 to fill up my dually F250 so I can tow my boat. Let's go Brandon!!!" posts that really get me.
 

Thump553

Lifer
Jun 2, 2000
12,217
1,702
126
Rate of inflation: 8.3%
Mortgage rate interest: 3.5%

Why would you pay off any debt below the rate of inflation? Inflation is reducing your dept load by 4.8% per year.

It will be 4.8% cheaper for you to pay off your dept next year, then this year.
If the rate of inflation continues, 9.6% cheaper in two years.

Just how do you think the US pays off its national dept? We inflate* it into nothingness. There is nothing stopping you from doing that with your personal finances.

-----------------------------------------

Think about government bonds, in high demand at less then 1% interest. We have 30 trillion in dept. 8.3% - 1% government bond interest = 7% inflated away.

The US government will inflate away 2 trillion dollars of dept this year. Another way of looking at it, the US will pay for the entire cost of the war in Iraq ( 1.9 trillion ) through inflation in one year. Some people call this a flat tax, but what is really happening is people with savings accounts are being taxed with the payments going to people with mortgages. The biggest mortgage holder being the US treasury.

Rich people pay for things by taking on debt for a reason. Debt at low interest rates is free money.

-----------------------------------------

If you think about it, the best way to equalize this for normal people is to raise the minimum wage. However, that is only happening in Urban ( democrat ) areas. In rural ( republican ) areas, people decided they do not want minimum wage increases this time around. So they are being left behind. Who are we to argue with them?
Paying all debt now makes sense only if you are sure your income will increase in the future at least at the rate of inflation. The last time US had significant inflation (late 60s thru mid 80's) it was stagflation-prices went up while income didn't (or rose at a much lower rate). This time around basically the entire world is undergoing inflation (Europe just reported an average current rate of something like 8.6%) so who knows what is best. Diamon's advice is horrible but I wouldn't stress paying off low interest debt.

OTOH if the USA jumps the shark and re-elects His Donaldship all bets are off-in such a case fungible liquid assets will be king. I frankly doubt the average person can do anything now that would weather the disaster he will bring.
 
  • Like
Reactions: Leeea

fskimospy

Elite Member
Mar 10, 2006
76,527
32,005
136
Paying all debt now makes sense only if you are sure your income will increase in the future at least at the rate of inflation. The last time US had significant inflation (late 60s thru mid 80's) it was stagflation-prices went up while income didn't (or rose at a much lower rate). This time around basically the entire world is undergoing inflation (Europe just reported an average current rate of something like 8.6%) so who knows what is best. Diamon's advice is horrible but I wouldn't stress paying off low interest debt.

OTOH if the USA jumps the shark and re-elects His Donaldship all bets are off-in such a case fungible liquid assets will be king. I frankly doubt the average person can do anything now that would weather the disaster he will bring.
If Trump were somehow elected again I am firmly convinced he would end democracy in the US but I also think most people’s lives would not change a lot.
 

Zor Prime

Senior member
Nov 7, 1999
455
64
91
How much do you guys drive every day?! Gas usually comprises about 5% of people’s expenditures and prices have risen by about 50% year over year. Are people really getting second jobs because of a loss of 2.5% of income?

I mean maybe this is a problem if someone has a giant truck and has a long commute to work but also in those cases this is people paying the piper for bad life choices.
I don't drive anywhere these days, I'm chauffeured and work out of home offices.

It's a culmination of gas prices and rising prices on things in general, however gas prices have risen dramatically quicker than most things so gas prices to the average Joe & Jane draws the most attention.

I get the point of bad life choices and I'll have to agree with that when it's the case, however if you were otherwise previously in an acceptable situation and have had it go to shit through no fault of your own that sucks ass, of course.
 
  • Like
Reactions: Leeea

Lost_in_the_HTTP

Diamond Member
Nov 17, 2019
7,015
3,976
106
Ramsey's an imbecile and though I have accounts at Chase, Dimon could well be one in on the conspiracy theory I floated on OT.
 
  • Like
Reactions: Leeea

Zorba

Lifer
Oct 22, 1999
12,115
6,706
136
Eh, Ramsey is a bit extreme in his views but there is a lot of good advice especially if you're not super vigilant or don't typically pay attention to details. And I'm not saying that's bad either. IIRC, he's completely against using any CCs as well. Which is just nonsense as long as you pay them off every month. In fact, the right cards can actually be used to your advantage ... greatly.

And as others have said, there's really no point in paying off debt below a certain %. If your mortgage is like 3%, it makes no sense at all. Especially as rates go up.
He deals with people that don't have proper, logical, relationships with money. Most people spend more when they play the credit card game. Some people can handle it. I make great use of the CC game, but have seen it go south on people.

Paying off all debt is also an emotional vs logical thing. Most people have a hard time moderating debt and separating good and bad debt. Plus there is a lot of security that comes from being debt free. I love in a very nice house and I could keep it working one minimum wage job. So I don't have to worry I could be on the street, regardless of how bad my job situation gets
 

[DHT]Osiris

Lifer
Dec 15, 2015
10,991
7,882
146
Rate of inflation: 8.3%
Mortgage rate interest: 3.5%

Why would you pay off any debt below the rate of inflation? Inflation is reducing your dept load by 4.8% per year.

It will be 4.8% cheaper for you to pay off your dept next year, then this year.
If the rate of inflation continues, 9.6% cheaper in two years.

Just how do you think the US pays off its national dept? We inflate* it into nothingness. There is nothing stopping you from doing that with your personal finances.

-----------------------------------------

Think about government bonds, in high demand at less then 1% interest. We have 30 trillion in dept. 8.3% - 1% government bond interest = 7% inflated away.

The US government will inflate away 2 trillion dollars of dept this year. Another way of looking at it, the US will pay for the entire cost of the war in Iraq ( 1.9 trillion ) through inflation in one year. Some people call this a flat tax, but what is really happening is people with savings accounts are being taxed with the payments going to people with mortgages. The biggest mortgage holder being the US treasury.

Rich people pay for things by taking on debt for a reason. Debt at low interest rates is free money.

-----------------------------------------

If you think about it, the best way to equalize this for normal people is to raise the minimum wage. However, that is only happening in Urban ( democrat ) areas. In rural ( republican ) areas, people decided they do not want minimum wage increases this time around. So they are being left behind. Who are we to argue with them?
Do you get raises based on inflation? Cuz I sure don't.
 

dullard

Elite Member
May 21, 2001
24,036
2,252
126
Why would you pay off any debt below the rate of inflation? Inflation is reducing your dept load by 4.8% per year.
Exactly. So few people understand this point. Having cash is bad when prices inflate, since that inflation means your cash is worth less and less and less. It it so obvious to so many people that cash is bad in that situation. But if you think, what is the exact opposite of having cash? Having debt. When there is inflation, you want as much low interest debt as you can get. It sounds perverse, but logically having low interest debt is the mathematical right thing to do in times of inflation. Buy as much as you can on low interest debt, then in a few years when money is worthless you can pay off that debt with pocket change.
 

pauldun170

Diamond Member
Sep 26, 2011
8,890
4,611
136
I'm just proud of the OP for posting a thread that doesn't have a question as the title and is not based off of some youtube video he watched.
Of course the post it self is filled with the same old high question count but fuckit....baby steps.
 

ASK THE COMMUNITY