Inflation and spending habits

[HDRider]

It does if all you own is a note.
You are owned by a financial institution.

If the cost of money is 3% and I make 10% net after taxes I am very much to the good.

A good example

According to the Apple's most recent financial statement as reported on January 28, 2021, total debt is at $112.04 billion, with $99.28 billion in long-term debt and $12.76 billion in current debt. Adjusting for $36.01 billion in cash-equivalents, the company has a net debt of $76.03 billion.

Apple now has $195.57 billion in cash on hand, according to the company's fiscal first-quarter earnings report released Wednesday.

That cash and that debt gives Apple $300 billion to play with

 

[Lee VanRoss]

The vast majority of people making a living on farming took out loans to get bigger.

This begs the question. How many farmers are there today compared to when Earl Butz was Secretary of Agriculture?
What is the ratio of Ag related jobs to farms (or ranches) compared to the time of Butz?
The people displaced have been infused into an already diluted labor force with heavy emphasis on the service industry.
"Would you like fries with that Sir?!

 

[Caustic Burno]

If the cost of money is 3% and I make 10% net after taxes I am very much to the good.

A good example

According to the Apple's most recent financial statement as reported on January 28, 2021, total debt is at $112.04 billion, with $99.28 billion in long-term debt and $12.76 billion in current debt. Adjusting for $36.01 billion in cash-equivalents, the company has a net debt of $76.03 billion.

Apple now has $195.57 billion in cash on hand, according to the company's fiscal first-quarter earnings report released Wednesday.

That cash and that debt gives Apple $300 billion to play with

Not unless you have the cash to pay the loan at any moment.
Your owned .

 

[HDRider]

Not unless you have the cash to pay the loan at any moment.
Your owned .

That is true. You pay based on cash flow. You are good as long as cash flow is good

 

[Caustic Burno]

That is true. You pay based on cash flow. You are good as long as cash flow is good

We agree
I have a 21 Z71 financed at 1.75% I can also write the check to pay it off.

 

[Lucky]

It does if all you own is a note.
You are owned by a financial institution.

I don't know CB, I've made allot of money off of borrowed money. I understand your comment about being owned by the bank but ideally you should be able to sell the asset and pay the bank back if you want out. There's allot of ways to look at this and I choose the one that gets me were I want to be in the quickest way possible while making money. Like I said debt doesn't break you but making bad decisions does.

 

[Brute 23]

I don't know CB, I've made allot of money off of borrowed money. I understand your comment about being owned by the bank but ideally you should be able to sell the asset and pay the bank back if you want out. There's allot of ways to look at this and I choose the one that gets me were I want to be in the quickest way possible while making money. Like I said debt doesn't break you but making bad decisions does.

That works until you don't have a market for it.

Look back on history and talk to people who lived through it. Empires werent built through the hard times on debt. Guys with cash bought land and other assets for pennies on the dollar because banks were begging them to take the repos from them.

 

[Lucky]

That works until you don't have a market for it.

Look back on history and talk to people who lived through it. Empires werent built through the hard times on debt. Guys with cash bought land and other assets for pennies on the dollar because banks were begging them to take the repos from them.

I didn't know it wasn't possible to have loan debt and cash on hand at the same time. I thought one of the big reasons to take out loans was to keep cash on hand. The goal is to borrow money on things that are going to make you money and keep the cash they make. Cattle and equipment are good examples of this. I try my best not to stick my neck out on things I know won't pay me back but I think I need anyway.

I really want a no till drill for winter forage. Last I looked they were around 30k. I can get a loan or pay cash but the return just isn't there so If I buy one I'll pay cash since it's a bad investment. On the other hand we are looking at buying another 25 hd. I'll borrow the money on the Cattle for sure because I know they'll cash flow and pay the loan back on their own.

 

[Caustic Burno]

I don't know CB, I've made allot of money off of borrowed money. I understand your comment about being owned by the bank but ideally you should be able to sell the asset and pay the bank back if you want out. There's allot of ways to look at this and I choose the one that gets me were I want to be in the quickest way possible while making money. Like I said debt doesn't break you but making bad decisions does.

Economy crashes and asset has no value.
Some late 70's living taught a lot that lesson along with the Savings and Loan crisis of the 80's was the largest bank failures since the Great Depression.
Don't think it can't happen again. Just because you understand debt has to be serviced the majority doesn't.

 

[Brute 23]

I didn't know it wasn't possible to have loan debt and cash on hand at the same time. I thought one of the big reasons to take out loans was to keep cash on hand. The goal is to borrow money on things that are going to make you money and keep the cash they make. Cattle and equipment are good examples of this. I try my best not to stick my neck out on things I know won't pay me back but I think I need anyway.

I really want a no till drill for winter forage. Last I looked they were around 30k. I can get a loan or pay cash but the return just isn't there so If I buy one I'll pay cash since it's a bad investment. On the other hand we are looking at buying another 25 hd. I'll borrow the money on the Cattle for sure because I know they'll cash flow and pay the loan back on their own.

If your revenue stops you will be living on that cash trying to service the debt. It's a race against time them.

Will you have enough cash to pay your loans and buy more assets. That will be the key.

 

[Lucky]

I can't say you guys are wrong. Anything can happen at anytime and we need to do our best to mitigate those risk. We just look at things differently and play the game in a different way. I tried the save up and pay cash game for awhile and got nowhere. Maybe I'm still nowhere though?

 

[shaz]

I dont see how automation suddenly changed the trajectory of the economy in 1971. Automation has been going on for well over a century. Innovation ends some jobs and opens up new jobs. When factories open it killed cottage industries and sparked migration to urban areas...to new jobs. Recent advances in technology have reduced the need for human labor in a factory but to date there are many jobs and careers opening up. There are people today concerned with AI, for example, and in certain cases it works quite magically. On an economic level however its been similar to the invention of say the threshing machine. There is some popular talk about the "end of work" and its arguable and conceivable but hasn't yet been seen.

Regarding oversupply of labor one massive change was the rise of the labor participation rate for women. This started in WW2 and eventually plateaued in the 1990s. A second factor is immigration, which is also driving down labor rates.

Foreign imports have match up to many of the graphs (https://tradingeconomics.com/united-states/imports). But that is sort of the point of the graph: the US controlled money supply after Bretton Woods moving the world to trade is USD. The question is who benefits from that - people who own corporations or the common person?

Your assessment of automation is correct. Test automation is what I do for a living and it probably saves jobs. Automation has led to some productivity increases which help the factory compete with cost and quality.

 

[HDRider]

productivity increases

Growth in labor productivity is measured by the change in economic output per labor hour over a defined period. Labor productivity should not be confused with employee productivity, which is a measure of an individual worker's output. https://www.investopedia.com/terms/l/labor-productivity.asp​

I put in many automated systems. They were always justified on reducing headcount.

The old story goes that it would take 4 times the US population to do AT&T's billing manually if it were not automated. I am sure that is not exactly true, but shows what automation does to headcount.

 

[HDRider]

Automation will help a person to do more/ If the volume of work goes up the person will not lose their job. That is productivity increase. If the volume of work stays the same then headcount is decreased.

 

[Brute 23]

I can't say you guys are wrong. Anything can happen at anytime and we need to do our best to mitigate those risk. We just look at things differently and play the game in a different way. I tried the save up and pay cash game for awhile and got nowhere. Maybe I'm still nowhere though?

Bad thing is... none of us will know until it's too late... for the good or the bad.

 

[greybeard]

It used to be that people worried about running out of money before they ran out of life but nowadays, lots of people run out of life before they run out of debt..

 

[Caustic Burno]

Automation will help a person to do more/ If the volume of work goes up the person will not lose their job. That is productivity increase. If the volume of work stays the same then headcount is decreased.

That doesn't apply when your government has an open border policy from farm labor to H1B . Americans loose every time.

 

[Little Joe]

There are alot of good jobs available that pay good money, plumbers,electricians,HVAC techs and installers,CDL drivers,carpenters,painters and many more. Right now there are plenty of good paying manufacturing jobs available but no one filling them. I deal with people from all the above almost daily for service or supplies and most can't get me what I need when I need it because it's either not available or they don't have enough people working to get their jobs done in a timely manner. The trades were like this before the pandemic, now it's even worse.

 

[Caustic Burno]

There are alot of good jobs available that pay good money, plumbers,electricians,HVAC techs and installers,CDL drivers,carpenters,painters and many more. Right now there are plenty of good paying manufacturing jobs available but no one filling them. I deal with people from all the above almost daily for service or supplies and most can't get me what I need when I need it because it's either not available or they don't have enough people working to get their jobs done in a timely manner. The trades were like this before the pandemic, now it's even worse.

No one wants to work because it's easier to sit at the house on government money. It's all part of the plan LBJ started 50 years ago.

 

[HDRider]

There are alot of good jobs available that pay good money, plumbers,electricians,HVAC techs and installers,CDL drivers,carpenters,painters and many more. Right now there are plenty of good paying manufacturing jobs available but no one filling them. I deal with people from all the above almost daily for service or supplies and most can't get me what I need when I need it because it's either not available or they don't have enough people working to get their jobs done in a timely manner. The trades were like this before the pandemic, now it's even worse.

So true. It is crazy. My area needs all the trade guys. They can work solo, work for a company or create their own company. It is a mystery why these needs go unmet. We are talking money.

There is a guy that runs a plumbing company. His place outside of town is as nice as any doctor or plant manager. He is always buying more land.