Money in Old West films

[Fading Fast]

This is the biggest problem. People simply buy more house than they can afford, not to mention long before they are ready to make that kind of commitment. They think they have some God-given right to own a $300,000 house by the time they're 25, despite making $40,000/year.

While I think everyone was at fault for the housing market debacle - the banks / financial institutions for poor standards, unsavory practices and encouraging insane risk taking, the government for, well, doing all the same things I just said the banks were doing (remember, the two largest mortgage guarantors where [and are] government agencies) and the public who dropped prudence and just went for the mania of the quick buck - I am disappointed that the public doesn't want to accept any blame.

Politically, depending on which side of the divide you are one, you will probably blame the banks or the government, but few blame the public. But there could never have been a housing bubble or liar loans (after all, it is the public - the person that took the loan - that lied in the "liar loan") without the public's active participation.

I see all three entities at fault - the banks, the government and the public - but few want to acknowledge the publics complicity. Kudos to you for doing so.

 

[HudsonHawk]

While I think everyone was at fault for the housing market debacle - the banks / financial institutions for poor standards, unsavory practices and encouraging insane risk taking, the government for, well, doing all the same things I just said the banks were doing (remember, the two largest mortgage guarantors where [and are] government agencies) and the public who dropped prudence and just went for the mania of the quick buck - I am disappointed that the public doesn't want to accept any blame.

Politically, depending on which side of the divide you are one, you will probably blame the banks or the government, but few blame the public. But there could never have been a housing bubble or liar loans (after all, it is the public - the person that took the loan - that lied in the "liar loan") without the public's active participation.

I see all three entities at fault - the banks, the government and the public - but few want to acknowledge the publics complicity. Kudos to you for doing so.

I think it's entirely the public's fault. Just because a lender wants you to take on debt doesn't mean you should. There's no one to blame but a greedy, entitled public.

 

[Stanley Doble]

The fault is in the theory that inflation makes the country richer. It is as if they said that by making the yardstick 1/2" shorter everyone would be taller. This is ridiculous but when it comes to money somehow they get away with it.

Suppose they did make the yard 1/2" shorter and everyone did feel taller. But it would be necessary to recalibrate billions of measurements that are measured in inches, feet, yards and miles. Suppose we could make all those adjustments, and the next year they made the yard 1/2" shorter again.

Everything would be thrown into chaos. Surveying, building, clothing manufacture, everything would have to be recalibrated again.

If we had to, somehow we could manage to function. But if you shortened the yard by 1/2" every year how long would it be until it disappeared entirely?

That is what we have now. 98% of the dollar has disappeared over the last hundred years and no one can say where it went. But part of the process of inflation is to misallocate assets and lead people to make bad financial decisions, based on bad data bad planning and bad belief systems.

Somehow in 2002 it seemed perfectly logical to loan people 100% of the price of a home they could not afford, because by the time the mortgage came due, inflation would have made the home worth 20% more than they paid for it, and inflation would also have raised their pay 20% so they could refinance for enough money to pay back the mortgage plus interest. And that this rigamarole of rising prices and rising mortgages could go on forever.

Of course it didn't and now we see that it couldn't, and that it was a crazy scheme to begin with. But other crazy schemes just as bad or worse are going on right now, based on the same crazy economic belief systems.

 

[HudsonHawk]

L

Somehow in 2002 it seemed perfectly logical to loan people 100% of the price of a home they could not afford, because by the time the mortgage came due, inflation would have made the home worth 20% more than they paid for it, and inflation would also have raised their pay 20% so they could refinance for enough money to pay back the mortgage plus interest. And that this rigamarole of rising prices and rising mortgages could go on forever.

No it didn't. It was completely illogical to anyone with a thimble full of sense. The problem was the sense of entitlement and "I want it all now" mentality of the ignorant. The problem wasn't that it seemed logical at the time, it was that people threw any logic out the window to satisfy their greed.

 

[Stanley Doble]

I think it's entirely the public's fault. Just because a lender wants you to take on debt doesn't mean you should. There's no one to blame but a greedy, entitled public.

This is absurd. You are saying that Joe Blow who wants to buy a house or a car, should have a more sophisticated understanding of banking than the banker who makes the loans.

When these easy money loans began in the early 2000s I was surprised and puzzled. They went against 200 years of banking experience and good banking practice. It seemed crazy to me. But were the loan officers crazy? Were the banks crazy? Were the government regulators crazy? Were the Nobel Prize winning economists at the Federal Reserve crazy? Or was I crazy?

In the end I concluded they knew something I didn't. I did quite a bit of looking around on the internet which convinced me they had a sophisticated new paradigm but I never did figure out what it was.

It turned out I was right in the first place and the new paradigm was a very old one based on palming off the bad loans on the next sucker. As long as no one squalked the counterfeit was as good as gold and everyone made a profit except the last sucker who got stuck with the hot potato. In this case, the last sucker ran to the government for a bailout and the American taxpayer got stuck for more than $1,000,000,000,000.

The point is, the whole scam hinged on two things. Unsophisticated borrowers who could be talked into expensive loans, and a belief that rising prices could be sustained forever by rising prices.

I don't blame the victims, I blame the con men who used modern advertising and sales techniques to sucker ordinary people into deals they did not understand, because they were deliberately constructed and sold in such a way that they couldn't understand them. They did not draw the line at outright fraud either. There are plenty of cases where borrowers agreed to one thing and found out later they had agreed to something completely different, hidden in the fine print. Or who were signed up for expensive loans when they would have qualified for much cheaper conventional loans, because the loan officer made a bigger commission.

Once you start digging you will be surprised at what you find. It happens that as a real estate investor I have an interest in loans, mortgages, real estate prices etc. This led me to look into the whole mess in 2009 and I was shocked at what I found out. None of it is secret or hidden, it is all out in plain sight, but not one person in 1000 is willing to look for it or savvy enough to understand it when they see it.

 

[HudsonHawk]

This is absurd. You are saying that Joe Blow who wants to buy a house or a car, should have a more sophisticated understanding of banking than the banker who makes the loans.

No, I'm saying that Joe Blow should understand what the mortgage payments are relative to his income, or he has no business buying a house. Anything else is just an absurd excuse to avoid responsibility.

 

[Stanley Doble]

L

No it didn't. It was completely illogical to anyone with a thimble full of sense. The problem was the sense of entitlement and "I want it all now" mentality of the ignorant. The problem wasn't that it seemed logical at the time, it was that people threw any logic out the window to satisfy their greed.

What about all the government officials and bankers who said after the crisis that it was completely unexpected and could not have been predicted by anybody?

I am with you. It all was completely illogical to anyone with a thimble full of sense. That is because we do not understand Keynesian economics and the power of inflation. If we were professional economists or politicians, we would have been completely happy with the boom and felt no uneasiness at all, and the collapse would have caught us by surprise.

 

[HudsonHawk]

What about all the government officials and bankers who said after the crisis that it was completely unexpected and could not have been predicted by anybody?

They were lying. Happens all the time.

I am with you. It all was completely illogical to anyone with a thimble full of sense. That is because we do not understand Keynesian economics and the power of inflation. If we were professional economists or politicians, we would have been completely happy with the boom and felt no uneasiness at all, and the collapse would have caught us by surprise.

I'm no professional economist either, but when a lender said I could qualify for a $3,000/month mortgage when I only brought home $4,000/month, it didn't take a lot of research for me to say "wait a second, I can't pay that much each month."

It's all about greed, on both sides of the equation. It's not that complicated.

 

[Stanley Doble]

No, I'm saying that Joe Blow should understand what the mortgage payments are relative to his income, or he has no business buying a house. Anything else is just an absurd excuse to avoid responsibility.

Well somebody has to know the difference between a good loan and a bad loan. To me it makes better sense that the bankers should be educated or regulated, than to put the responsibility on people who are not educated or regulated.

You are overlooking the fact that millions of people turned down the bad loans or never applied for them, for the reasons you named. There were about 30 million of the bad loans, in other words, 9 out of 10 Americans did not get involved.

Another thing, where are the people supposed to get this knowledge? No school or college teaches a class in personal finance that is worth anything. People make bad financial decisions every day. If you think there will ever be a time when scams and bad investments will disappear because everyone will be too smart you are living in a dream world.

 

[Stanley Doble]

They were lying. Happens all the time.



I'm no professional economist either, but when a lender said I could qualify for a $3,000/month mortgage when I only brought home $4,000/month, it didn't take a lot of research for me to say "wait a second, I can't pay that much each month."

It's all about greed, on both sides of the equation. It's not that complicated.

You are right about the greed part but I am not so sure they were all lying. I know some were, but I am sure there were those who did not see the flaw in the plan because they had believed all their lives in the Keynesian something for nothing system.

 

[HudsonHawk]

Another thing, where are the people supposed to get this knowledge? No school or college teaches a class in personal finance that is worth anything. People make bad financial decisions every day. If you think there will ever be a time when scams and bad investments will disappear because everyone will be too smart you are living in a dream world.

There will always be people who fall for pyramid schemes because if their greed. A fool and his money are soon parted. I have no sympathy for them.

 

[Guttersnipe]

That is more or less what I was trying to say.When gold and silver were the standards, prices might rise and fall due to political or economic conditions but sooner or later they came back to normal. The age of ever rising prices, or falling money values, began exactly 100 years ago.

Your chart confirms what I said earlier about the value of the dollar settling down after the end of the Napoleonic Wars (and the War of 1812) and holding steady until the beginning of the First World War, except for a spike inflation at the time of the Civil War.

This chart shows the exchange rate between the U.S. dollar and British Pound. From it we can see that, at certain points, the price of English imports increased. However, this data doesn't really tell us if these were localized or reflected across the economy as a whole. Thus, you can't really extrapolate inflation rates here. Without comprehensive data sets, like the consumer price index, it's very difficult to track historical inflation rates with any accuracy.

 

[Stanley Doble]

There will always be people who fall for pyramid schemes because if their greed. A fool and his money are soon parted. I have no sympathy for them.

So you believe swindlers, liars and thieves should not be regulated in any way and anyone who is fool enough to trust another person deserves what they get.

 

[Stanley Doble]

This chart shows the exchange rate between the U.S. dollar and British Pound. From it we can see that, at certain points, the price of English imports increased. However, this data doesn't really tell us if these were localized or reflected across the economy as a whole. Thus, you can't really extrapolate inflation rates here. Without comprehensive data sets, like the consumer price index, it's very difficult to track historical inflation rates with any accuracy.

So the chart does not really reflect inflation. There are some very good charts of inflation based on commodity prices like wheat, wool, and barley going back hundreds of years. Also price charts of gold and silver.

 

[HudsonHawk]

So you believe swindlers, liars and thieves should not be regulated in any way and anyone who is fool enough to trust another person deserves what they get.

Wow, that's a giant straw man. Just because I believe that people shouldn't spend money they don't have doesn't mean I think they should get swindled. I'm not even sure how the two are related.

 

[Stanley Doble]

Unless you have looked into the matter you have no idea how the public was swindled in the real estate and mortgage markets 2002 - 2008. If you did, you wouldn't wonder how the people who bought the mortgages could be so foolish as to be taken in. You would wonder why the people selling the mortgages are not in prison.

 

[HudsonHawk]

Unless you have looked into the matter you have no idea how the public was swindled in the real estate and mortgage markets 2002 - 2008. If you did, you wouldn't wonder how the people who bought the mortgages could be so foolish as to be taken in. You would wonder why the people selling the mortgages are not in prison.

Oh I've "looked into it". And I'm not wondering at all how people got taken in. People are greedy. Money lenders take advantage of greed. The only thing people are victims of is their own greed and over-inflated opinion of themselves.

 

[Stearmen]

This sight really puts it all into perspective! http://www.drquinnmd.com/bank.html As you can see, Jesse James had a $25,000 bounty on his head. Also, keep in mind, in the short run in the boom towns, mining and cattle, prices could go through the roof. Far more people became rich supplying the miners then panning for gold. Just ask Levi Strauss, who made his first fortune in San Fransisco dry goods store!

Getting back on topic, the URL above will answer a lot of the original posters questions.

 

[MikeKardec]

Film makers often "split the difference" on details that would push audience members out of the entertainment experience ... details like a dollar amount that is so low that it would cause people to spend a moment thinking about it rather than following the story. If you are trying to get an audience to follow the emotional truth of the narrative it could be argued that you don't to distract them. I don't agree with this but it's a comment that has been made to me and I can sort of see the point. This would be especially true if you were talking about say, a wanted poster ... the amount would need to feel like enough to convince you the person was really wanted!

There is also the previously mentioned tendency of Hollywood to be fixated on wealth. My own experience working on a film story set at the extremes of the British Empire had me arguing with the director over the vehicle a Colonial official would be driving. I'd written a rusty Land Rover into the script but he wanted a Bentley! I arranged to not be able to find any vintage Bentleys and we settled on a Humber Super Snipe.

Prices in the American West were always dependent on supply and some fairly banal things were hard to get because of transportation issues. In the mining camps especially, prices were often insanely high. They were usually off the beaten track and people were getting rich, high demand, difficult supply and a great deal of quickly gotten wealth cause local inflation.

Similar to this, a friend of mine who grew up in southern Africa told me many times of the incredible buying power of the dollar ... yet some imported goods were of even more value. In the 1970s they often paid more than $4 for a can of soup.

 

[itsbruce]

I also find it interesting that inflation doesn't equally affect all prices:

Average annual income today is 18 times greater than it was in 1946.

And CEOs of American companies earned roughtly 18 times as much as their workers in 1946. Now, it's 273 times more. So, if by average you meant mean rather than median, the average annual income is now something that almost nobody earns. Which means that the disparity between old Hollywood money and the reality experienced by today's film viewers is going to be very different for various sections of the audience.