The only big effect was to get people out of the cars they owned and into cars they didn’t own, requiring monthly payments! People who had had no auto debt now saw themselves indentured for four years
Two comments The first is that the last time I purchased a car (earlier this fall) the dealer offered to do the DMV paperwork for me BUT ONLY IF I FINANCED THE CAR through the dealer. (Since I am 83 and dread the DMV I financed the car, which makes sense- given point 2.The second point I would make is that if the real inflation rate is around 8%-10% and I am a solvent person, I would still buy with financing; after all I expect to be repaying with depreciated dollars and the 'real interest rate' is negative.
I totally agree with you about negative consequences of our debt based system but debt and the resultant economic instability is just a natural result of rampant money printing
Never go for financing until you've established the "Out The Door Price". Dealers are notorious for hammering fees into cash sales and even more so with financing. Quick story I established OTDP signing the paperwork noticed the dealer had added in 48 months of financing. Sorry, that was a mistake! After ripping up the paperwork, yes it was.
Volcker (ironically a transmogrified form of "Voelker", German for "a man of/for the people"), "squeezed" inflation from the system only momentarily. To have ended inflation permanently, Volcker's partner in crime, the government, would have had to cease the insidious process of deficit spending and the resultant debt monetization, which, the government not only did not do, but increased the activity! The FED should prove its "independence" by refusing to "buy" any more debt and see how long it remains in existence. Best always. PM
Ah yes -- the Cash for Clunkers program. I can remember only one person of my acquaintance who made use of that program.
Middle-aged, divorced, quite wealthy, she was living with a man of less than modest means, for whom she had bought a car that was on its last legs because he did not own a car. Or anything else, for that matter. Meanwhile, she was driving a three-year old car and contemplating trading it in for a new one.
Cash for Clunkers happened, and she traded in the clunker for a brand-new car, then gave her car to her live-in friend.
Aside from the fact I did not have a high opinion of him, I admit to thinking the Cash for Clunkers program did not, in this case, do anything for the economy except perhaps remove from the highway a clunker that would probably have served a hard-working immigrant who needed a way to get to and from work. Auto production was not increased since she was planning to buy a new car anyway.
I wonder if we know the name of the policy adviser who concocted this scheme. He should be forced to wear a dunce cap in public for the rest of his life.
I've never driven anything but clunkers. I've only owned 2 new cars in my life, but scores of clunkers. Out of the 30-40 cars I have owned in my life, I have only had 3 car notes, and all 3 I retired early (make SURE your car loan has a "no prepay penalty" clause!) I have gotten by over the years without car payments, and it has been the difference between making "it" and not. Cars are a scam and have been since the late 60s and early 70s when government took over the car biz via emissions regulations and "safety" requirements. The end result? Cars have exploded in cost, and they are all, in effect, the same. As LIberace famously said, "You like it? You paid for it." Best always. PM
Again, cash for clunkers was the beginning of the green new deal.It had nothing to do with indenturing people , it had to do with getting people out of environmentally unfriendly vehicles. It affected a wide demographic. And to bill's point, Ahead , no different effect on the economy is if they were military vehicles being destroyed. A more recent example of this green debacle is the closing down of perfectly good and viable power plants.
I have a friend like you, he buys only high mileage Jeeps and Toyotas, then drive them to the wheels fall off. His last Jeep in very good condition had $250k miles, he sold it with $450,000 miles when a relative parted with a 2006 fully loaded Lexus with 67k mile. He quipped this is his first new car, figuring to run it out to 600K miles.
Personally, I hate to drive 400 miles is my upper limit. This fellow drove from Long Island NY to Miami in 2 days, and from there to Carmel, CA. I'm hoping one day for an autonomous jet or Star Trek transporter to come on to the market.
My secret, such as it is, would be that I like to be 3rd owner of an upscale car, generally only domestics, with this logic: the first owner had the wherewithal to buy a "nice' car, and likely didn't drive it too hard and was able to keep it up. The second owner generally drove it until it started needing "stuff", and along comes Paul who does most of his own work, anyway, buys it for cash and nurses it along. I am disappointed if I can't get it to 300K, and then I junk it. I've made mistakes, bought with my heart instead of my head, and I've had "help" from deer and other drivers, too, but generally speaking, I've come out OK. I, my wife, and 5 kids always had something to drive. I'm down to about 10K-12K miles of driving per year now, so it's no longer a big deal what I'm driving. My "newest" of 5 vehicles, now at 240,000, is a Pontiac Torrent. It's been a great little vehicle. Best always. PM
Love it Paul! I haven’t had a car payment since 1986. My wife and I are currently driving a 2005 Escalade and a 1996 Corvette. Both of them were purchased for cash and came off 3yr lease’s by the original “owners”. The corvette has 120k and the Escalade just passed 250k, both have been great vehicles. The corvette is just too difficult to enter and exit anymore and will be sold soon. I plan on buying my wife a newer ride with some of the money and I’ll drive her Escalade until the wheels fall off!
I posted a sign on my business building located in a crusty section of Philly. I buy junk cars $400, the normal junkyard offering was $200.
A 100 calls later to my Google voice number sifted through produced 20 candidates. I obtained a barely running eyesore. Traded it in for a $3500 credit bought my daughter good used car. I sold a list of 19 other cars to the same dealer who in turn used the cars as a sales incentive to new car purchasers without a junker to trade in.
The sad part of the Obama's welfare for car dealers program was the complete destruction of the good used car market where 80% of Americans source vehicles.
Today's new cars are expensive to maintain, and built to be junked in 10 years or less with those that make it into the used car market coming off the short term lease market where motorist ignore maintenance. Government ruins everything they touch.
The young can benefit enormously by reading and following Bill's sage advice about debt. Our grandparents bought naked, tiny homes, and sat on orange crates at the dinner table for a while. Socials were dinners at friends homes, church pot-lucks, etc.
Mortgage-burning parties were common events.
Young marrieds do not need to buy or rent their own home. My inlaws asked their daughter (my wife) and I to sell our mortgaged townhouse and buy a 2 family home with them - CASH. They paid most. We lived there together, top and bottom floors, and split expenses 50/50.
Had extended family reunions there. Both of them died at home, years apart. I was astounded at the huge impact no mortgage had on my net worth, even after dividing the house evenly with their other heirs.
CARS: My uncle, as a teen, bought a 12 year old Model A before WWII for $15, and it transported him, his 3 brothers, and other family and friends for well over a decade (with 2 motor rebuilds by that team.) The brothers drove it across the USA and back.
I have always bought used cars exclusively.
KEY: I ask around to find good, honest, self-employed mechanics who get all their business from word-of-mouth.
They often direct me to great buys. They inspect every vehicle I am serious about buying, and when I buy one my mechanic repairs anything they find wrong or expect will shortly go wrong. I take care of minor routine maintenance myself: fluids, lights, windshield wipers, and so forth.
These vehicles serve us very well for 3-10 years, are well maintained, comfortable, and modestly attractive.
I can recommend this without hesitation to young and old.
The savings to me must be in the hundred$ of thou$and$.
We sold our 3,000sf 2-family home a couple years ago and with half of the proceeds bought a 900sf retirement home, cash on the barrelhead, in an established neighborhood of 1-2 acre lots, with plenty of gardens and greenhouses, 12 minutes away from church and ample shopping.
Amazingly, our children and grandchildren visit us more here, 400 miles away, than they did when we were 1-5 hours drive. And they stay longer. They love the open space, the 12 foot swing, free self-created games (and, of course, hide-and-seek), the chickens, and working with us in the vegetable garden.
The indebted life that Bill bemoans is blind madness for young and old -- and nations.
Yes, Don, thanks for reminding everyone who “owns” what. That paid for house is never truly yours. It’s pretty sick when you realize that point. The state owns it all!
"Auto sales would stop. House building sites would go quiet. Restaurants and hotels would be safe spaces for mice and cockroaches. Millions of people would be out of work. Millions of houses would be foreclosed. There would be long lines at the food banks."
Makes me wonder if Bill's been reading The Great Taking.
Is it just me or can Bill be so wrong (or oblivious) again about life events and individual actions? The American Dream: Work your *SS off - and don't be stupid about spending the money. Use $$ to buy necessities and save the rest. Oh yeah, remember to: "Work Your *SS Off!" and "Don't Buy Stupid Crap!" . Pay off your debt -ASAP. I could continue to lecture but you get the idea.
This is one of the most idiotic columns Bongo Bill has ever written and shows how he, and people like him, stretch the meaning of words in order to fit the argument they are trying to make.
Let's put aside the "cash for clunkers" program which admittedly was moronic and destructive and focus on Bill's message about mortgages and car loans. First, Bill's reference to these as a form of indenture is absolutely false. Mortgages allow you to have a home and live in it while paying it off over a period of time. Bill says that you should save up the money first and then buy the house. This could take many years if not decades, and in the meantime, you need some place to live and therefore would have to rent. How is renting any different than having a mortgage? Would Bill say you are indentured to the landlord? After all, while Bill chalks up a mortgage to "debt", what about the future rental payments one would have to make instead? The future rent payments are a future obligation one has to pay. Obviously, one would have to go through a financial analysis to determine which way is the better way to go in any particular circumstance - mortgage or renting - but neither is equivalent to being an indentured servant. If loans are not abused and people are not living above their means, mortgages and car loans allow one to pay for something over time while enjoying the product now. So, the issue is not whether people are indentured, but whether they are acting financially responsibly.
P.S. If the "cash for clunkers" program had been instituted under the Trump administration, all you would hear from Bill is "Trump, Trump, Trump...". But since it was under Obama, not a word about who was president at the time.
Great summation of the questions using facts. While there's no question that having no debt is preferable (having been debt-free for about 12 years I can attest to it's superiority) using Bongo's "pay cash for everything" strategy is just not realistic, especially for the young that are just starting out in life. If he qualified his entire piece by saying, "This is for those over the age of 50" it might have some validity, but alas he didn't.
I bought my house with a very low 30 year fixed interest rate and an affordable down payment.
It was an intentional decision. I reasoned that my house would appreciate in value as the dollar declined.
So and behold: My reasoning was sound.
My fixed rate mortgage payment is, thanks to the Fed's annual 2% inflation schedule, now modest in the scheme of things and, should anyone want to buy my ultra appreciated home, they'll need some major dinero.
And, some time ago, I realized I needed to exchange my dollars for items that rose in value as the purchasing power of the dollar declined.
I chose houses and collectable silver and gold coins. By far, restoring and re-selling homes made (and is making) me the most money
Boy, what a lot of fun it must have been to be sitting at Bill's Thanksgiving dinner table yesterday as he raised that question. I think in previous years Bill used to make new projects for folks to work on outside around the farm. Take a break, Bill. Tell us about the old truck and the gypsy wagon project.
Cash for clunkers was marketed as an economic stimulus , but it was one of the first green new deal programs. Let's force americans out of there , gas duzzling , high emission vehicles. Effectively screwing the
Yeah, but it was during the obummer administration this abomination took place at OUR expense, he didn't trash that POS the way he would trash trump for farting.
Well Bill, I think the earth has already stood still. There is no way ( which ever party is in power) that the direction of our system will change until there is a major collapse.
Sad, but history has many examples to back up my opinion.
All Is debt has indentured somebody. Remember, the borrower is slave to the lender. As world famous economist Leslie Nielsen said.... Nothing to see here. Move along. Move along. everything's fine.
Americans have always been geared to the appearance of wealth, good because lacking a fiscal eduction a fool and their money are soon parted. No amount of money or credit in the hands of a fool will bring wealth.
Trump is pushing 50 year fixed rate mortgages? As if making easier to purchase will lower the sale price of a home. Government solution with the best of intentions...what could possibly go wrong?
Two comments The first is that the last time I purchased a car (earlier this fall) the dealer offered to do the DMV paperwork for me BUT ONLY IF I FINANCED THE CAR through the dealer. (Since I am 83 and dread the DMV I financed the car, which makes sense- given point 2.The second point I would make is that if the real inflation rate is around 8%-10% and I am a solvent person, I would still buy with financing; after all I expect to be repaying with depreciated dollars and the 'real interest rate' is negative.
I totally agree with you about negative consequences of our debt based system but debt and the resultant economic instability is just a natural result of rampant money printing
Never go for financing until you've established the "Out The Door Price". Dealers are notorious for hammering fees into cash sales and even more so with financing. Quick story I established OTDP signing the paperwork noticed the dealer had added in 48 months of financing. Sorry, that was a mistake! After ripping up the paperwork, yes it was.
Volcker (ironically a transmogrified form of "Voelker", German for "a man of/for the people"), "squeezed" inflation from the system only momentarily. To have ended inflation permanently, Volcker's partner in crime, the government, would have had to cease the insidious process of deficit spending and the resultant debt monetization, which, the government not only did not do, but increased the activity! The FED should prove its "independence" by refusing to "buy" any more debt and see how long it remains in existence. Best always. PM
Ah yes -- the Cash for Clunkers program. I can remember only one person of my acquaintance who made use of that program.
Middle-aged, divorced, quite wealthy, she was living with a man of less than modest means, for whom she had bought a car that was on its last legs because he did not own a car. Or anything else, for that matter. Meanwhile, she was driving a three-year old car and contemplating trading it in for a new one.
Cash for Clunkers happened, and she traded in the clunker for a brand-new car, then gave her car to her live-in friend.
Aside from the fact I did not have a high opinion of him, I admit to thinking the Cash for Clunkers program did not, in this case, do anything for the economy except perhaps remove from the highway a clunker that would probably have served a hard-working immigrant who needed a way to get to and from work. Auto production was not increased since she was planning to buy a new car anyway.
I wonder if we know the name of the policy adviser who concocted this scheme. He should be forced to wear a dunce cap in public for the rest of his life.
I've never driven anything but clunkers. I've only owned 2 new cars in my life, but scores of clunkers. Out of the 30-40 cars I have owned in my life, I have only had 3 car notes, and all 3 I retired early (make SURE your car loan has a "no prepay penalty" clause!) I have gotten by over the years without car payments, and it has been the difference between making "it" and not. Cars are a scam and have been since the late 60s and early 70s when government took over the car biz via emissions regulations and "safety" requirements. The end result? Cars have exploded in cost, and they are all, in effect, the same. As LIberace famously said, "You like it? You paid for it." Best always. PM
Again, cash for clunkers was the beginning of the green new deal.It had nothing to do with indenturing people , it had to do with getting people out of environmentally unfriendly vehicles. It affected a wide demographic. And to bill's point, Ahead , no different effect on the economy is if they were military vehicles being destroyed. A more recent example of this green debacle is the closing down of perfectly good and viable power plants.
I have a friend like you, he buys only high mileage Jeeps and Toyotas, then drive them to the wheels fall off. His last Jeep in very good condition had $250k miles, he sold it with $450,000 miles when a relative parted with a 2006 fully loaded Lexus with 67k mile. He quipped this is his first new car, figuring to run it out to 600K miles.
Personally, I hate to drive 400 miles is my upper limit. This fellow drove from Long Island NY to Miami in 2 days, and from there to Carmel, CA. I'm hoping one day for an autonomous jet or Star Trek transporter to come on to the market.
My secret, such as it is, would be that I like to be 3rd owner of an upscale car, generally only domestics, with this logic: the first owner had the wherewithal to buy a "nice' car, and likely didn't drive it too hard and was able to keep it up. The second owner generally drove it until it started needing "stuff", and along comes Paul who does most of his own work, anyway, buys it for cash and nurses it along. I am disappointed if I can't get it to 300K, and then I junk it. I've made mistakes, bought with my heart instead of my head, and I've had "help" from deer and other drivers, too, but generally speaking, I've come out OK. I, my wife, and 5 kids always had something to drive. I'm down to about 10K-12K miles of driving per year now, so it's no longer a big deal what I'm driving. My "newest" of 5 vehicles, now at 240,000, is a Pontiac Torrent. It's been a great little vehicle. Best always. PM
Love it Paul! I haven’t had a car payment since 1986. My wife and I are currently driving a 2005 Escalade and a 1996 Corvette. Both of them were purchased for cash and came off 3yr lease’s by the original “owners”. The corvette has 120k and the Escalade just passed 250k, both have been great vehicles. The corvette is just too difficult to enter and exit anymore and will be sold soon. I plan on buying my wife a newer ride with some of the money and I’ll drive her Escalade until the wheels fall off!
Interesting but too complex and costly.
I posted a sign on my business building located in a crusty section of Philly. I buy junk cars $400, the normal junkyard offering was $200.
A 100 calls later to my Google voice number sifted through produced 20 candidates. I obtained a barely running eyesore. Traded it in for a $3500 credit bought my daughter good used car. I sold a list of 19 other cars to the same dealer who in turn used the cars as a sales incentive to new car purchasers without a junker to trade in.
The sad part of the Obama's welfare for car dealers program was the complete destruction of the good used car market where 80% of Americans source vehicles.
Today's new cars are expensive to maintain, and built to be junked in 10 years or less with those that make it into the used car market coming off the short term lease market where motorist ignore maintenance. Government ruins everything they touch.
The young can benefit enormously by reading and following Bill's sage advice about debt. Our grandparents bought naked, tiny homes, and sat on orange crates at the dinner table for a while. Socials were dinners at friends homes, church pot-lucks, etc.
Mortgage-burning parties were common events.
Young marrieds do not need to buy or rent their own home. My inlaws asked their daughter (my wife) and I to sell our mortgaged townhouse and buy a 2 family home with them - CASH. They paid most. We lived there together, top and bottom floors, and split expenses 50/50.
Had extended family reunions there. Both of them died at home, years apart. I was astounded at the huge impact no mortgage had on my net worth, even after dividing the house evenly with their other heirs.
CARS: My uncle, as a teen, bought a 12 year old Model A before WWII for $15, and it transported him, his 3 brothers, and other family and friends for well over a decade (with 2 motor rebuilds by that team.) The brothers drove it across the USA and back.
I have always bought used cars exclusively.
KEY: I ask around to find good, honest, self-employed mechanics who get all their business from word-of-mouth.
They often direct me to great buys. They inspect every vehicle I am serious about buying, and when I buy one my mechanic repairs anything they find wrong or expect will shortly go wrong. I take care of minor routine maintenance myself: fluids, lights, windshield wipers, and so forth.
These vehicles serve us very well for 3-10 years, are well maintained, comfortable, and modestly attractive.
I can recommend this without hesitation to young and old.
The savings to me must be in the hundred$ of thou$and$.
We sold our 3,000sf 2-family home a couple years ago and with half of the proceeds bought a 900sf retirement home, cash on the barrelhead, in an established neighborhood of 1-2 acre lots, with plenty of gardens and greenhouses, 12 minutes away from church and ample shopping.
Amazingly, our children and grandchildren visit us more here, 400 miles away, than they did when we were 1-5 hours drive. And they stay longer. They love the open space, the 12 foot swing, free self-created games (and, of course, hide-and-seek), the chickens, and working with us in the vegetable garden.
The indebted life that Bill bemoans is blind madness for young and old -- and nations.
Totally agree, except for one small inconvenience: property taxes.
Yea, don't pay them and men with guns come to Your place!
Yes, Don, thanks for reminding everyone who “owns” what. That paid for house is never truly yours. It’s pretty sick when you realize that point. The state owns it all!
Good thing too that one has such a strong say in how that money is spent, wait, no we don’t.
Good thing CA prop 13 limits annual increases to 2% and SALT deduction raised to 40K
Ed
They keep trying to repeal prop 13. This is from our corrupt politicians.
"Auto sales would stop. House building sites would go quiet. Restaurants and hotels would be safe spaces for mice and cockroaches. Millions of people would be out of work. Millions of houses would be foreclosed. There would be long lines at the food banks."
Makes me wonder if Bill's been reading The Great Taking.
Is it just me or can Bill be so wrong (or oblivious) again about life events and individual actions? The American Dream: Work your *SS off - and don't be stupid about spending the money. Use $$ to buy necessities and save the rest. Oh yeah, remember to: "Work Your *SS Off!" and "Don't Buy Stupid Crap!" . Pay off your debt -ASAP. I could continue to lecture but you get the idea.
This is one of the most idiotic columns Bongo Bill has ever written and shows how he, and people like him, stretch the meaning of words in order to fit the argument they are trying to make.
Let's put aside the "cash for clunkers" program which admittedly was moronic and destructive and focus on Bill's message about mortgages and car loans. First, Bill's reference to these as a form of indenture is absolutely false. Mortgages allow you to have a home and live in it while paying it off over a period of time. Bill says that you should save up the money first and then buy the house. This could take many years if not decades, and in the meantime, you need some place to live and therefore would have to rent. How is renting any different than having a mortgage? Would Bill say you are indentured to the landlord? After all, while Bill chalks up a mortgage to "debt", what about the future rental payments one would have to make instead? The future rent payments are a future obligation one has to pay. Obviously, one would have to go through a financial analysis to determine which way is the better way to go in any particular circumstance - mortgage or renting - but neither is equivalent to being an indentured servant. If loans are not abused and people are not living above their means, mortgages and car loans allow one to pay for something over time while enjoying the product now. So, the issue is not whether people are indentured, but whether they are acting financially responsibly.
P.S. If the "cash for clunkers" program had been instituted under the Trump administration, all you would hear from Bill is "Trump, Trump, Trump...". But since it was under Obama, not a word about who was president at the time.
Great summation of the questions using facts. While there's no question that having no debt is preferable (having been debt-free for about 12 years I can attest to it's superiority) using Bongo's "pay cash for everything" strategy is just not realistic, especially for the young that are just starting out in life. If he qualified his entire piece by saying, "This is for those over the age of 50" it might have some validity, but alas he didn't.
I bought my house with a very low 30 year fixed interest rate and an affordable down payment.
It was an intentional decision. I reasoned that my house would appreciate in value as the dollar declined.
So and behold: My reasoning was sound.
My fixed rate mortgage payment is, thanks to the Fed's annual 2% inflation schedule, now modest in the scheme of things and, should anyone want to buy my ultra appreciated home, they'll need some major dinero.
And, some time ago, I realized I needed to exchange my dollars for items that rose in value as the purchasing power of the dollar declined.
I chose houses and collectable silver and gold coins. By far, restoring and re-selling homes made (and is making) me the most money
Boy, what a lot of fun it must have been to be sitting at Bill's Thanksgiving dinner table yesterday as he raised that question. I think in previous years Bill used to make new projects for folks to work on outside around the farm. Take a break, Bill. Tell us about the old truck and the gypsy wagon project.
Yes and that idiot Pelosi also the brains behind the light bulb fiasco. Cash for clunkers and light bulbs. Pure geniuses in politics.
And don’t forget, it was that dope Bush, who I voted for, who signed the light bulb fiasco.
Cash for clunkers was marketed as an economic stimulus , but it was one of the first green new deal programs. Let's force americans out of there , gas duzzling , high emission vehicles. Effectively screwing the
certain demographics and our economy, generally.
BB-Excellent article. No mention of TDS. WOW it must be Thanksgiving.
Yeah, but it was during the obummer administration this abomination took place at OUR expense, he didn't trash that POS the way he would trash trump for farting.
Because he’s a flaming liberal!
Abe, Bill is equivocating loans with indentured servitude....not good and not accurate.
No need to buy(finance) new cars
Save the cash and buy used
Got Luxury SUV excellent condition 15 years for $7K
Well Bill, I think the earth has already stood still. There is no way ( which ever party is in power) that the direction of our system will change until there is a major collapse.
Sad, but history has many examples to back up my opinion.
Jim Marshall
All Is debt has indentured somebody. Remember, the borrower is slave to the lender. As world famous economist Leslie Nielsen said.... Nothing to see here. Move along. Move along. everything's fine.
Americans have always been geared to the appearance of wealth, good because lacking a fiscal eduction a fool and their money are soon parted. No amount of money or credit in the hands of a fool will bring wealth.
Trump is pushing 50 year fixed rate mortgages? As if making easier to purchase will lower the sale price of a home. Government solution with the best of intentions...what could possibly go wrong?