Debts & Loans

Unusual Credit Card Debt

Things that are unusual usually return to normal. If they did not, there would be no "norma" to return credit card debt. That is why you can expect stocks to become more expensive when they are cheap and cheaper when they are expensive. Stocks today are expensive - they trade for an average of about 20 times earnings. Usually, they trade for only 12 to 15 times earnings, so you can expect them to get cheaper credit card debt.

Houses are expensive too. They usually go up at a rate roughly equal to the rate of inflation, income, or GDP growth - no more. For the past 10 years, however, they’ve gone up three to five times as fast. House prices cannot grow faster than income for very long; people have to be able to pay the prices in order to live in them credit card debt.

Credit Card Debt

So, you can expect houses to revert to their mean too credit card debt. Prices will fall . . . or else stop rising. These simple reversions to mean are hardly controversial. We don’t know when they will happen or how, but that they will come about is practically guaranteed. More interesting to us are the reversions to other, bigger means. An empire itself is a rare thing. It is normal, but unusual. Nature abhors a monopoly. An empire is a monopoly on force. Nature will tolerate it for a while, but sooner or later, the imperial people must revert to being normal people with credit card debt, and the preposterous beliefs that the imperial people cherish, also must pass away.

They must go up to a kind of humbug heaven, where absurd ideas and idle lotteries strut around while the gods point, snicker, and collapse into mirth, rolling around clutching their stomachs as if the humor of it was going to kill them. The pound is an extraordinary thing too. Do you know what the long term mean value of paper currency is? Well, it is zero. That is what the average paper currency is worth most of the time . . . and it is the black hole into which all paper currencies in the past have gone.

Win a Lottery or Credit Card Debt

There could be something magic about the pound that makes it unlike any paper currency in the past - that is, something that makes it non-mean reverting. But if anyone knows what it is he is not working on this book. For the last hundred years, the pound has lost value faster than the decline of the romanera Dinarius after the reign of Nero. This is not surprising. Roman coins had silver or gold in them. In order to make the coins less valuable, they had to reduce the precious metal content.

People didn’t like credit card debt. The pound, by contrast, contains no precious metal. Not even any base metal. It is just paper. It has no inherent value. There is nothing to take out, because there was never anything there in the first place. Over time, the pound is almost certain to revert to its real value - which is as empty as deep space. In the big picture of things, it is also unusual for one civilized nation to earn far more per capita than another. In the thousands of years of history, some groups were poor credit card debt . . . others were rich credit card debt. But extreme differences had a way of working themselves out - by trade, war, pestilence, and degeneracy. By the year 1700, a man in India, China, Arabia, or Europe had about the same standard of living, which was not very high anywhere. But along came the industrial revolution, which threw incomes out of balance and changed the way people think. Europe stole a march on the rest of the world’s industries, with huge gains in output coming in a relatively short period of time. Soon, Europeans were the world’s leading imperialists, convinced that they had its best economic system, its finest scholars, its highest morals, and it’s most splendiferous armies.

But if the world works the way we think it does you can expect the incomes of Europeans - and their American cousins - to revert to their historic means. The process could take several generations. It could stall. There could be countertrends. But there is no reason to think a man’s labor is inherently worth more in France than in Bangladesh, or that a plumber with stars and stripes on his overalls should earn more than one with a crescent moon.

If there is a mean, things will regress to it. You can expect, relatively speaking, Asian incomes to rise and American incomes to fall. That is, of course, just what is happening now? In India, for example, real incomes have more than doubled in the last 10 years. Just to introduce a gloomy remark, we note that we are personally and individually regressing to the mean. The mean for a human being is death - or non-existence. A person walks the earth for only three-score and 10, as it says in the Bible. The rest of the time, he is only a potential person . . . or a former person

For millions of years, he is either in the future . . . or in the grave. You, dear reader, are enjoying that ever-so-brief period of exaggeration . . . of hyperbole . . . of extraordinary, mean-busting usualness we call “life.” It is not for us to know the time or place when it comes to an end. But like all mean-reverting phenomena, only a fool would bet against credit card debt.

The way people have always made money is by buying low and selling high credit card debt

But betting against the end is just what most Americans are doing. They are borrowing and spending as if there were no tomorrow, and they are investing as though there were no yesterday. All they would have to do would be to look at the patterns of the past; they would see that it doesn’t make sense to buy at high prices - you can’t make money that way. The way people have always made money is by buying low and selling high credit card debt. Doing it the other way around doesn’t work. Nor does borrowing and spending make you rich. Tomorrow always comes - at least it always has up until now - and you have to pay your credit card debt.

Over time, prices go up and down. Many other things ebb and flow as well, boom and bust or bloom and wither. All of these phenomena go through predictable cycles that can be roughly modeled. Analysts study the cycles to try to figure out where we are currently located in the habitual pattern. It is often frustrating work, because the patterns are rarely quite as regular and well - defined in the present as they appear to have been in the past. Still, it is a question worth asking: Where in the cycle are our credit card debts?

One of the ways you can tell where you are in the cycle is to look at what your friends and neighbors believe. Markets make opinions. We recall that you can tell where the market really is by looking at the opinions people have. When people you know are all of the opinion those stocks will rise 15 percent per year - for an indefinite amount of time - you can be sure you are nearer to a top than a bottom. When people believe the opposite - that stocks will never go up - most likely, you are near a bottom credit card debt.