The settings today favour those who invest in assets rising in value with the increasing money supply. Assets such as shares, real estate, precious metals and crypto currencies are going up. They will go up in the long term. The price of other stuff is fairly stable. The low price of other stuff will not last and those who have invested in assets for the long term will be okay while those who have not will lose.

People talk about the trickle down economy where tax cuts for income earners take away from those who don't pay income tax. The real trickle down the money supply. The money supply is like a pyramid of champagne glasses with a magnum of champagne pouring from the top of the pyramid. The glasses at the top few levels are filled the bottom rows are empty. The magnum of champagne is the money supply. The top level glasses are those who get their hands on the new money and loan it on to others at a higher price. These are in the mid levels to lower levels. Those with no assets that rise in value are at the base.

This situation is happening right now. In my home town in regional NSW it used to be quite cheap to rent there. A decent house cost $150 a week to rent. A lot of people took advantage of this cheap living and never bought a house. In recent times landlords in the area are selling their investment properties to people coming in from out of town to live there. Rents have risen as the supply of rentals have reduced. Someone on limited income can't find anywhere to live. It won't be long before there are homeless people there. This is in an area where there has not been any homeless people for decades.

Gboots said..


Are Investment companies sitting on cash or do they have it invested ? If they are sitting on cash then the assumption is that they are waiting for a major correction before investing .

Yes, I'm referring to them sitting on the cash awaiting a correction. Unfortunately for them it didn't really happen. Now I'm guessing they are scratching their heads looking for an opportunity like what happened 10 months ago.

Harrow said..

FormulaNova said..
Yeah, I was similarly shocked. Some guy wants realestate and ends up killing people to try and get it. It also showed the level of corruption in place that makes someone think they can get away with it.

If your kids died in an accident its one thing. They happen, however unfortunate. But to find out its most likely a criminal attempting to get something and then find that he has been helped along by corrupt police and politicians... heartbreaking.

I hope this level of corruption is a thing of the past, but humans being human means that it will probably happen again.

Hang on, that was only a recent show. I remember now that I didn't see it on TV, I read about it over 10 years ago in a newspaper interview with Saffron's daughter after he died. Why is it now only just being 'revealed'?

I don't know. I saw mention of it in another article and then watched it on iview. The program seems to cover two ABC journalists interviewing people and building up evidence of the links between dodgy police commissioners, criminals, and the NSW government.

Until I watched this, I thought the fire was just an accident, and watched it because I expected it to explain what happened. I didn't expect it to show that it was a conspiracy.

Gboots said..
Are Investment companies sitting on cash or do they have it invested ?

Not sure what investment companies you are talking about but no investment companies sit on cash. They have it invested somewhere, maybe a low interest yielding term deposit, but something, high risk or low risk.

Oh, and they don't deal in cash. They invest money that somebody else has invested in them (also known as borrowings). Investment companies that use their own money for investing end up broke or no better off.


The only they all make money is using somebody else's money.

That's why there should be a financial transaction tax. Every time the money moves it is taxed. And a sliding scale for how long the "investment" is held.

Tax out investing in crap like CFD derivatives and forex shorts and promote investing in companies that manufacture and produce.

Get rid of the computer generated micro-second transactions.

Every financial crisis these days occurs when the ever spiraling roundabout of credit flow is disrupted. It isn't real money and never was. Crisis these days doesn't happen when the potato crop is down 20%. They happen when the futures market is down 20% or the re-insurance on sub-prime debt derivatives take a dive.



Maybe Bitcoin has its use ?

Use it for financial markets that want / need to gamble and leave real money for the normal people. Bitcoin crashes and just the gamblers hurt.

What's the use of "generational wealth" anyway?

Your daughter does her dough and gets caught driving high on cocaine?

Your son spends all his money on coke and hookers and wastes the rest? Or worst still, he gets caught by some minor actress and then coerced to move continents?

In my observation, only people with money get divorced. The rest of us grin and bear it until we die.

Tell me again what you want generational wealth for? The crowing about 'winning' I understand, but no one will care anyway.

myscreenname said..

FormulaNova said..
What's the use of "generational wealth" anyway?

Aside from the elevated status, I kind of like the idea of early retirement, snorting coke between a nubile strippers firm breasts and driving luxury super cars.

You don't do this already? I guess maybe you would have that money if you didn't waste it on bitcoin. but I don't do the luxury car thing. that's just silly.

myscreenname said..

FormulaNova said..
You don't do this already? I guess maybe you would have that money if you didn't waste it on bitcoin. but I don't do the luxury car thing. that's just silly.

Fair enough, everyone has different hobbies, but you do the butt-hurt thing in a darkened room?

Well, I haven't heard anyone telling me of their enormous profits yet, so I reserve the right to be sad about it some time in the future.

Life is full of missed opportunities. I used to work for a company that gave stock options and you could also buy discounted shares through their internal program. All of my colleagues were buying up, and I did too. The company culture was not my thing though, and I left. Later quite a few of these guys were millionaires from this. Some got nothing as they waited too long. I regret not buying up their shares even when I left, but such is life. You make your choices and get on with it. Crying about what could have been is a waste of time.

FormulaNova said..
Well, I haven't heard anyone telling me of their enormous profits yet, so I reserve the right to be sad about it some time in the future.

Life is full of missed opportunities. I used to work for a company that gave stock options and you could also buy discounted shares through their internal program. All of my colleagues were buying up, and I did too. The company culture was not my thing though, and I left. Later quite a few of these guys were millionaires from this. Some got nothing as they waited too long. I regret not buying up their shares even when I left, but such is life. You make your choices and get on with it. Crying about what could have been is a waste of time.

It sounds like the big difference between a computer and yourself is that with a computer you only need to punch information into it once.

Carantoc said..

myscreenname said..
It sounds like the big difference between a computer and yourself is that with a computer you only need to punch information into it once.

Did you just make that up or has it been said famously somewhere else ?

'Cause it is brilliant. My day will now be full of giggles. Just the secret inside ones that make me look creepy and mad. But still giggles.

How dare you! Giggling about my fear. In this day and age of being a victim, I see that as a threat and I will try and hide away in embarrassment while posting on Instragram about it. I think as a result we should shut down and cancel anything remotely related to 'punching' 'information' and the word 'once' as its not inclusive.

I think Adolf's response tells us more about his computer literacy. I can see him 'punching' the 'buy now' button on Bitcoin. "I'm gunna be rich, I will buy even more!"

FormulaNova said..
Sorry for going back so far in the thread, but I found it funny when I had a work colleague telling me 'he was buying a house for his kids' and then a cousin saying the same thing. Both inadvertently pushing up the demand and price for houses to prevent their kids facing high prices.

Beats the heck out of me why few people seem to sit back and ask why the government does not revamp the situation and fix it so that their kids can afford to buy a house without relying on previous generations buying it for them. What happens when they get that house anyway, do they live in it or just rent it out so that they could live somewhere else?

Australia is a funny place. Sydney where there is not as much space and people are fighting over themselves to get a house, let alone an affordable one. Plenty of job opportunities though. Then there is Perth where there is a tonne of room and heaps of new houses available in the affordable range, but not as many jobs.

You would almost think that the answer is to move more jobs into areas other than Sydney or Melbourne or capital cities in general.

Yep, you could say another pyramid scheme like crypto, except there's a new crypto appearing every other day but you can't make more land. But what do you do? One person reversing their decision to buy a house for their kids won't stop the price rise, and so they make the decision to dive in. I'm stuck on the fence on this, but still maintain the position that if the CGT break given to investors was removed it would reduce prices. No need for a transition, just announce it and draw a line in the sand for new property purchases. Prices will drop, some investors will be unhappy, but they've made enough anyway and all investments carry risk anyway. It not like this has never been discussed and could never happen.

Harrow said..

FormulaNova said..
Sorry for going back so far in the thread, but I found it funny when I had a work colleague telling me 'he was buying a house for his kids' and then a cousin saying the same thing. Both inadvertently pushing up the demand and price for houses to prevent their kids facing high prices.

Beats the heck out of me why few people seem to sit back and ask why the government does not revamp the situation and fix it so that their kids can afford to buy a house without relying on previous generations buying it for them. What happens when they get that house anyway, do they live in it or just rent it out so that they could live somewhere else?

Australia is a funny place. Sydney where there is not as much space and people are fighting over themselves to get a house, let alone an affordable one. Plenty of job opportunities though. Then there is Perth where there is a tonne of room and heaps of new houses available in the affordable range, but not as many jobs.

You would almost think that the answer is to move more jobs into areas other than Sydney or Melbourne or capital cities in general.

Yep, you could say another pyramid scheme like crypto, except there's a new crypto appearing every other day but you can't make more land. But what do you do? One person reversing their decision to buy a house for their kids won't stop the price rise, and so they make the decision to dive in. I'm stuck on the fence on this, but still maintain the position that if the CGT break given to investors was removed it would reduce prices. No need for a transition, just announce it and draw a line in the sand for new property purchases. Prices will drop, some investors will be unhappy, but they've made enough anyway and all investments carry risk anyway. It not like this has never been discussed and could never happen.

No it wouldn't. The GCT or the cost would just be incorporated into the land price. Credit creation (I do like the champagne analogy above, someone is getting it) not tax breaks. Plenty of countries don't have this tax and the prices still rise.

Easy,
low cost money, pumped into a limited supply, backed by the legislation or if needed the governments countries army to protect private property rights is the reason.

and as someone said above when this credit supply is cut off (because the banks ledger is holding mortgages against land price below the lent value, then the system is vulnerable to ANY catalyst. The GFC was caused my excessive lending against land. But so has been every cycle. It was just far more obvious this time round. The one before was the 1987 stock market crash. Every blames that. But it was the excessive lending on land well before the market crashed that was ACTUALLY the cause. If you didn't notice all markets crashed during the gfc as well. But land values peaked two years earlier. (This is always the case by the way).



anyhow keep Rambling on about your theories or read what I posted before. When you see the cat you can't help but see it.
Inflation, no inflation. fixed currency no fixed currency. Fiscal or monetary policy. Right wing, left wing governments. Tax, no tax (or differing taxes.) . I could keep going on. The result has always been the same. Because ... the law of economic rent garnered against government granted licenses. Land is only one of these (the mechanism is the same) but the big daddy of them all.



I will give you a simple question that may provide some insight. Why did taxi licenses become so expensive? Or a commercial crayfish license? Or band width ? Or or ... or

Income tax is worse. CGT is more palatable than income tax.

Harrow said..

Gboots said..
Income tax is worse. CGT is more palatable than income tax.

Well, if you're lucky you get to pay both, or neither.

Discouraging you to earn more is a poor form of tax .
Earning usually comes with effort .
Capital Gains on the other hand is usually at the mercy of timing .
Personally I believe we should have much higher GST and nil income tax

Mobydisc said..

Gboots said..

Harrow said..

Gboots said..
Income tax is worse. CGT is more palatable than income tax.

Well, if you're lucky you get to pay both, or neither.

Discouraging you to earn more is a poor form of tax .
Earning usually comes with effort .
Capital Gains on the other hand is usually at the mercy of timing .
Personally I believe we should have much higher GST and nil income tax

Federal income tax is a war tax. Federal income tax was imposed to pay for war.

It is the greatest scam of Australian history, besides the theft of land from Aborigines, to keep the Federal income tax in peace time. We can blame that great conservative, Bob Menzies for this scam and the disasters that have resulted from the federal income tax.

Moby, if we didn't have it, what would pay for all the services and costs of running a country?

FormulaNova said..

Mobydisc said..

Gboots said..

Harrow said..

Gboots said..
Income tax is worse. CGT is more palatable than income tax.

Well, if you're lucky you get to pay both, or neither.

Discouraging you to earn more is a poor form of tax .
Earning usually comes with effort .
Capital Gains on the other hand is usually at the mercy of timing .
Personally I believe we should have much higher GST and nil income tax

Federal income tax is a war tax. Federal income tax was imposed to pay for war.

It is the greatest scam of Australian history, besides the theft of land from Aborigines, to keep the Federal income tax in peace time. We can blame that great conservative, Bob Menzies for this scam and the disasters that have resulted from the federal income tax.

Moby, if we didn't have it, what would pay for all the services and costs of running a country?

How were the services and this running the country, whatever that is, paid for without a federal income tax? Look it up. In any case the federal government can create as much money that it likes to pay for whatever goodies they want to dish out.

Australia in the 19th century became one of the most dynamic and prosperous lands in the world and not because of taxes. The British stopped transporting criminals here because too many people were voluntarily taking a very slow and dangerous journey here. They were not moving here because there was an income tax to pay services and to run the country.