Ron Paul question for Stevejhx

Because I respect your opinion

HAHA

"I am not looking to debate" you, Jerry. The price is now the whole amount. We want the entire eighty thousand.

Oh, for Christ sakes, here--

Blood has been shed. We've incurred risks, Jerry. I'm coming into town tomorrow. Have the money ready.

mh23 and stevejhx,

this is the one area that i do indeed disagree with stevejhx. the difference is that i don't view Gold as a "commodity" with physical applications such as copper or sugar. or even oil.

Gold has always been used as a store of value, throughout mankind history, and most importantly, throughout numerous rise and falls of different fiat currencies.

read up on its history. why did the US government (thank you Roosevelt) literally confiscate private individuals who owned Gold in 1933?

more importantly, read and educate yourself about Bretton Woods I, how it came about, and how it collapsed due to a near-hyperinflationary situation in the 70s. also, note how during that time, the price of Gold skyrocketed.

why did Nixon pull the final axe on the international Gold standard when the French came calling for Gold instead of the worthless paper USDollars the Fed was busily printing to finance the Vietnam war?

at least up to then, the Fed couldn't just print as much money as it wanted to- it had to back each USD with Gold, so it couldn't just go off like it can today. thank you Bernanke and Greenspan.

read up on the current Bretton Woods II agreement, and why it is eerily following the path of the collapse that Bretton Woods I suffered with massive inflation already en route.

in fact, why do you think the Central Banks around the world own massive stashes of Gold and actually regulate how much Gold each Central Bank can sell (Washington Agreement in 1999)?

Read up and educate yourselves- and you will see the sham that the Fed and fiat currencies are.

I have not read R.P.'s book, and I will confess to a liberterian bent. But his argument for the gold standard is that it eliminates inflation. But it doesn't. There was rampant inflation and deflation when we had the gold standard. It's simply not true.

The IRS. Okay, here's the deal. The government gives you stuff, you pay for it. I agree that the government is not efficient, but if you've ever worked in a large organization as I have (BofA, Price Waterhouse) you will see that they're not all that efficient either, and are full of politicians and incompetents.

But that's besides the point. You need tax revenue, therefore you need to tax something. The most efficient thing to tax are transactions. Wages are transactions. Sales are transactions. Inheritances are transactions. Property conveyances are transactions. Etc. etc. and so on and so forth.

So let's say you don't want to tax transactions. You need to tax something else. The only thing that's left - if it's not on the P&L, which is what transactions are - are assets and liabilities. Well, you could tax liabilities, but that doesn't make sense: why would you tax somebody with a debt? (Though oddly we do have an onerous mortgage tax in NY.) So the only thing left would be assets.

Let's say you tax assets. Property taxes, for instance. Your property tax goes up, you lose your job, you have no more income tax (not having income) but you still have to pay your property tax, which means...

...because you no longer have income, you have to sell. It makes no sense. FL has no income tax. I moved there. I work for myself. In a bad year I'll make say $150k. In a good year I'll make say $350k - $400k. With that, if I pay income tax, I'm paying it based on what I'm making, not on what I "own" that goes up or down in value depending on factors alien to me.

Give me income tax any day.

The gold standard does not work. Elimination of the IRS doesn't work. They sound nice, but when you do the research, they simply don't work.

Do I believe in Fannie Mae and Freddie Mac? Absolutely not. I don't think the government should be in the business of insuring anything. But what would happen if we took them away?

Property prices would fall by 80% - 90%, because no bank would be willing to give a mortgage. Look at countries without these institutions, like Argentina, Italy: purchases are ALL CASH. The day you need to buy a house all cash is the day prices collapse.

Ditto regulation. Perfect markets are perfect in textbooks. Beyond there - not. Let's invent a hypothetical unregulated bank, call it Citigroup. It can do whatever it wants. It takes out extremely dangerous positions with responsible entities, let's call them, oh, US Bankcorp.

Citigroup defaults. US Bankcorp has a counterparty risk. But US Bankcorp's counterparties are not just Citigroup - they're a fictional JPMorgan Chase (solvent), Bank of America (solvent).

SHIT. Now US Bankcorp can't settle with JP Morgan Chase or Bank of America because Citigroup can't settle with it.

No dude, Ron Paul would take us back to the days of Thomas Jefferson and horse-drawn carriages. These institutions and the regulations exist for a reason. "I'm from the government and I'm here to help," as R. Reagan said.

Well, before Social Security and Medicare - two imperfect institutions - 90% of the elderly lived under the poverty level.

Jerkstore: I'm not sure I agree with you a hundred percent on your police work there.

MMAfia, "Gold has always been used as a store of value."

So could water, aluminum, pig iron. I remember an episode of the classic "Lost In Space," when there was precisely an alien race on whose planet iron was rare (unlikely, but that was the plot) whose store of value was pig iron. The Robinsons just couldn't understand the value of pig iron.

Gold is emotional. It's pretty. It doesn't rust. But it has virtually no industrial applications beyond certain high-performance electronics and back fillings, b/c it's soft and doesn't rust.

Copper can replace gold in just about any industrial application.

Does that mean you shouldn't invest in gold? No. If you think that a bunch of lemmings are going to start buying gold (or real estate) and drive up the price temporarily, go ahead, do it. But gold has no intrinsic value b/c it has no intrinsic applications.

Remember that FDR had the gold standard and we still had the Great Depression. Gold is meaningless. Money is meaningless - it is only worth the trust that people put in it. Money is fiat - it's simply a mode of exchange. Convert dollars to cows. You could. If you could stick a cow or two in your wallet, and by Neosynephrine with is, people with colds will give you a cow.

Fiat currency systems have never worked.

In mankind's history, there has never been one that did not escape the "death by hyperinflation" scenario. The current fiat system appears to be approaching its last legs.

Here is a brief history of fiat currencies and their failures:

http://globaleconomicanalysis.blogspot.com/2007/06/why-does-fiat-money-seemingly-work.html

Most importantly, I urge anyone who does not understand the history to watch this video:

http://www.youtube.com/watch?v=iYZM58dulPE

That is perhaps THE MOST enlightening video I have ever come across to this day, in all seriousness.

This was so clever, and I fucked up the spelling:

"and by Neosynephrine with is,"

=

"and buy Neosynephrine with it."

The best-meant jokes sometimes go awry.

stevejhx, watch the video.

Mafia believes that man has not advanced since the stone age.

Dude, MMAfia, I respect almost everything you say, but "Papyrus grows in near unlimited quantities nearby, to the obvious benefit of Pete" is PRECISELY the issue.

That is the function of the Fed and all Central Banks: to guard the value of a fiat currency. You could be Robert Mugabe-like and print all the money you want, order people to sell goods at below the cost of production and, like King Egbert, command that the waves cease.

But it's not going to happen. The entire reason that the dollar (was) the reserve currency of the world is b/c we understood how to prevent the value of a fiat currency from deflating / inflating. Gold makes no difference. Research inflation / deflation in the history of the world. Your coins could be made of gold or plaster: it makes NO difference.

Now, as I said elsewhere, if a bunch of lemmings believe that Mary was a virgin and gold is special and want to pour their money into it - DO IT.

But don't believe it's any more special than Manhattan real estate.

WHAT? @stevejhx: if a bunch of lemmings believe that Mary was a virgin

stevejhx you blasphemous little man. You and your mother deserve to be excommunited before you go to hell.

Supporting Ron Paul pretty much shows the supporter's irrelevancy.

Like I said earlier, stevejhx, watch the video.

If you watch the video in its entirety and still maintain your views, then my friend, we just have differing opinions which I will respect- nothing personal my friend.

But do me the favor of watching the video.

Here is the link again:

http://www.youtube.com/watch?v=iYZM58dulPE

55sbs5t, "stevejhx you blasphemous little man. You and your mother deserve to be excommunited before you go to hell."

Excommunicate me from your church of pedophiles. See whether I care. I know gay bishops, you chaste SOB.

Face it: there are a billion stars in our galaxy, and a billion galaxies in the universe. If you think Mary was a Virgin and Jesus is looking out after you with that vastness, G-d bless.

The universe is just too vast for any of your myths to be true.

MMAfia, I skimmed through that 1970's video, & it's crap. Sorry, it's crap, just like the Virgin Mary.

Look, all currency is fiat, whether it's paper or gold. Watch "Lost in Space" to understand that basic principle.

"we just have differing opinions which I will respect- nothing personal my friend."

Nothing personal. I just know how banks work, how the money supply works, how gold is no different from mercury or cows. That is Econ 001.

Fair enough- although you didn't watch the whole video which explains the history money, how it started with barter, why barter was inefficient and how it evolved to an intermediary currency which throughout time shifted from pressed tea leaves in China to bird feathers in south america, to iron in africa, and why it eventually shifted into Gold, and how the fractional banking system started the concept of inflation, but most importantly, how the Fed throughout American history followed the Gold standard, ditched it multiple times (to finance America's wars) only to come back to it, and how in the current cycle where we ditched it to finance the Vietnam war, how we're coming to the same ending as with all the other times in the past when we were forced to return to the Gold standard due to rampant inflation.

how's that for a run-on sentence?

The main difference between fiat and Gold is that you can't create Gold out of thin air- it is very very difficult to find and to mine, and supply is essentially stagnant. You are right in that it didn't have to be Gold per se- it could have been some other tangible physical entity that has a limited supply. again, why we ended with up with Gold is explained in the video. with fiat money- well, the Fed is at liberty to expand the money supply and debase as it pleases to- limitless. infinite and endless supply thanks to the printing machine.

In the end stevejhx, we appear to have differing views and no matter how each one of tries to convince the other, we will fail. So, rather than extending this into an endless back-and-forth, let's just say we differ regarding our views on Gold and focus back on the more important issue, which is really the reason why we're here- Manhattan Real Estate.

;-)

Thanks for your thoughtful responses. I guess what i like about Paul is his fealty to the Constitution, and his distrust of the Federal Government and its ever increasing size and power. Anyway, let's get back to Manhattan real estate.

Wow, I'm not Catholic, but pretty offensive stevejhx

Weren't you the guy who said this
stevejhx
about 3 weeks ago
ignore this person
report abuse Yes I am pathetic, and a big dick. It helps that I like dick (but don't get nearly enough of it)

and this
stevejhx
about 7 weeks ago
ignore this person
report abuse
Re FI, no, I own a 2-bedroom 2-bath apartment facing the Great South Bay with no roommates to pay the mortgage. Though I wouldn't mind a few Twinkies.

and this
stevejhx
about 11 weeks ago
ignore this person
report abuse "Why do we need to hear so incessantly from a loud mouth ultra-dramatic lonely self-hating gay man whose real value is no more than a wacky waiving arm-flailing inflatable tube man?"

Is spunky gay?

'Cause it can't be me, since I was out w/ friends M, T, & will be out 2rrow R, & have a date w/ a 25-year old.

Sorry dude, get a life.

Morning

Love when steve tells people to get a life.

Remember this: http://www.streeteasy.com/nyc/talk/discussion/3410-real-estate-is-a-bad-investment?page=1
stevejhx
about 12 weeks ago
ignore this person No matter how you slice it, renting is ALWAYS financially more beneficial over time than owning.

Let's make some financial assumptions that are borne out by decades of empirical evidence:

1) Real property prices and rents increase at the rate of income, or 0.7% per year adjusted for inflation.

2) The S&P 500 increases at a real rate of 8.0% per annum.

These being true, it is ALWAYS better to rent property than to buy, if you invest the down payment in the S&P 500. Watch:

Say you make $100,000. This implies that you can spend up to $2,333.33 per month in total housing expenses (28%).

An 80/20, 30-year fixed $375,000 mortgage at 6% gives you monthly mortgage payments of $2,248.31.

Assume that taxes and common charges amount to a VERY CONSERVATIVE 10% of total mortgage payments, or $224.83 per month.

A $375,000 mortgage implies a purchase price of $468,750, and a down payment of $93,750.

If rented an apartment for the amount of the mortgage payment, you will have paid $903,455.33 in rent over 30 years if it increases 0.7% per year.

If you invest the down payment in the S&P 500 for 30 years, $943,374.08 at the end of 30 years, for a total net profit of
$39,918.75. To that, however, add your yearly maintenance and tax payments $2,697.96, increasing 0.7% per year and accruing 8.0% per year over 30 years, and you will have earned an additional $330,084.36, making your total profit $370,003.11.

Now do the same thing for your house. If your $468,750 home appreciates at a real annual rate of 0.7%, at the end of 30 years you will have a home worth $577,863.68, for a profit of $109,113.68. Add to that the original loan of $375,000 - the rest of the equity you will have built - and you get a gross profit of $484,113.68. But you would have paid $434,393.21 in interest, so your real profit is $49,720.47. In addition, you will have spent $90,343.15 in tax and maintenance, making your GRAND TOTAL PROFIT a whopping NEGATIVE $40,622.68.

That's right! You rent for the amount of your mortgage, all values go up linearly in line with historic data over time, and you will wind up with a total profit of $370,003.11. Whereas if you buy a home you will wind up with a loss of $40,622.68.

This of course excludes special assessments and all the transaction costs associated with owning real estate: brokers' fees, conveyance tax, etc. It also ignores the tax effect on dividends. But dividends and capital gains tax rates are currently the same (and can't be predicted in the future). The only further benefit from owning is the $250,000/$500,000 tax exemption. But it is doubtful that $410,625.79, which is the absolute value of the difference between the owner's loss and the renter's gain.

Guys, it's indisputable: renting is FAR better in the long-term than buying. All the figures and assumptions I used are real and verifiable. Do your own calculations: rent for the price of your mortgage payment, invest the down payment and maintenance and property taxes in the S&P 500 at the real rate of increase of 8.0%, increase your property value, rent, taxes and maintenance payments at the real rate of 0.7%, deduct the mortgage interest paid, and you will see IT IS ALWAYS MORE BENEFICIAL TO RENT.

Do your own calcs, or criticize the model. I'm waiting....

Timkins, Timkins, Timkins. Read that entire thread. If you consider owner-occupied real estate to be an "investment," you're wrong - you're better of renting and investing the money elsewhere than expecting a long-term "return" on owner-occupied real estate.

It's indisputable.

If, however, you consider owner-occupied real estate to be what it is - capitalized rent - then sometimes it's better to own, sometimes it's better to buy. It's better to buy when the amortized rent + ancillary expenses / benefits related to ownership are lower than rent. It's better to rent when they're higher. Right now, in Manhattan, they hover around twice as high.

You drank too much of the National Association of Realtors's Kool-Aid. You watch too much "My House Was Worth What?" on HGTV. Long-term, owner-occupied real estate can only increase in value at the rate of incomes because that's the most that rents can increase. Therefore, the price reflects incomes + leverage: cheap money makes prices go up, expensive money makes prices go down.

Did I say "cheap money"? You mean like what we've seen in the past 5 years....

Sorry dude, get a life.

and don't touch any young boys.