Forget the Fed: The FIRE Economy Rules

[GRG55]

I heartily disagree...

...Maybe college campuses should not be allowed to have CC fundraising desks. Continued reforms are great; but to eliminate credit cards for many consumer applications would be a vast inconvenience and an even greater security risk to the many consumers like myself who use credit cards responsibly.

My problem is that credit cards are handed out like candy to young economically naive people -- and the practices I outlined earlier are, in my opinion, methods of entrapping naive "marks"

I wonder why there isn't a rechargable "cash card", similar to a pre-paid mobile (cell) telephone SIM card? One that does not provide access to a bank account other than for recharge purposes. Would be more convenient than cash, more secure than credit/debit cards. Does anyone know if this is how places like Finland are using mobiles for consumer purchase charges (deduct it from SIM balance)?

My times have changed... when I graduated from engineering school in the late '70's, just weeks before starting my first professional job, I received in the mail a credit card solicitation from a national bank - one where I held a savings account dating from my paper route days. I went to the local branch with the solicitation and proof of employment with a Fortune 100 multinational. They advised me they were in error, and that indeed I could NOT qualify for a credit card until I could show at least 3 months of post-graduate income. Imagine that today...

[dbarberic]

I wonder why there isn't a rechargable "cash card", similar to a pre-paid mobile (cell) telephone SIM card? One that does not provide access to a bank account other than for recharge purposes. Would be more convenient than cash, more secure than credit/debit cards.

This product does exist. Wal-Mart is pushing a "Visa Cash Card" where you can bring in your paycheck and convert it to cash on the Visa Cash Card for a rate lower than if you converted to actual cash. It basically works like a Visa gift card but you "re-charge" it by cashing in your paycheck at Wal-Mart.

Wal-Mart's end run-a-round into the banking business.

[c1ue]

Would you use a credit card at 18% interest rate for all your day to day purchases if you did not have the grace period to pay it off -- in other words you were charged that interest every month -- wouldn't you rather pay by cash or check?

You are assuming several things:

1) That someone knows what the full economic costs of that interest means over time

2) That they are not willing to assume this cost

3) That they feel the economic pain of their decision

Only tightwads like me (and evidently you ;)) have gone through all 3 steps.

I actually use credit cards for everything, but also pay my bill off every month. Actually makes accounting easier plus I get the CC perks.

I'll be convinced that intervention is necessary when I see people getting raped by credit cards to pay for food - as opposed to the 50 inch LCD TV or the Pucci/Gucci dress.

I actually think the economic education process is going backwards: I've recently seen a columnist on TheStreet.com who is going 'counter-wisdom' and telling young people to spend because their savings don't matter.

It is amazing why no one talks about the rule of 72 and what it means for a young person:

Interest rate or investment gain as a whole number (i.e. 5% = 5) divided into 72 equals the number of years for a given investment to double.

Therefore given that on average people work 40 years, 40 divided by the result of the above = the number of times your investment will double in your lifetime.

Thus a 7.2% interest/gain means 4 doubles, or in other words $1 saved at 25 years old = $2 saved at 35, $4 saved at 45, and $8 saved at 55 and equals $16 saved at 65.

Therefore $100 saved a month at 25 is equivalent to $800 saved at 55. This does matter.

Only if interest rates/gains are very low does it 'not matter'.

Cramer's nephew should be shot as a populist chip of the old block.

[necron99]

I totally agree with the worry about splitting our paycheck in half between loan repayment and taxes, just to live... call me prescient, or maybe not (no more than your average iTulip member), but in 1996, under the previous administration, I thought this was all pretty obvious. That year I wrote a fiction piece, under an alias, which I think might lend a first-person perspective to living under a runaway FIRE economy... (Adobe PDF file)

http://www.processedworld.com/Issues...y_a_Winner.pdf

Speak of the devil; here was his credit card bill. As usual, he signed over his RatScan paycheck to ViMaCard and sealed the envelope. As usual, he purchased another four weeks of freedom, while adding another handful of pebbles to the landslide of debt waiting to devour him in the future.

[...snip...]

He uplinked to Leebay's website, ignoring the obligatory random advertisement virus:

"STARVING?? AMERICORP-BANK wants to help YOU!! You'll love our great rates on food and clothing loans."

That would probably be more appropriate under Part II of this article, but I've been too lazy to purchase iTulip Select, so I can't comment there...

[c1ue]

Pretty good story.

I would like to have seen some historical/economic background though - just a couple of sentences a la Piper.

The Negative Checkoff thing - classic!

[Lukester]

Necron99 -

Great read. Reminds me very much of the satirical writing of the British Sci Fi author John Brunner (The Jagged Orbit, Stand on Zanzibar, The Sheep Look Up) from the early 1970's. Not well known but very competent, humorous yet acerbic, tautly woven and masterful within that genre. His character sketches are extremely rich and carefully drawn, verging on kaleidoscopic casts of characters (heavily ironic and very funny) within a Sci Fi genre where genuine caustic humor is a great rarity.

Your style is a close match for his. Needless to say his writing from 35+ years ago is not dated in the least - it perfectly anticipates the dystopia you also describe. Unfortunately much of his work is out of print but you can still pick easily up the above novels on Amazon used. If you still write or read this genre, he's the best of the lot.

http://www.sfreviews.net/jaggedorbit.html

http://www.eyrie.org/~eagle/reviews/...798-836-1.html


Your own vision of our near future is tautly written and very entertertaining! Needless to say it is also profoundly depressing, which you'll doubtless accept as a great compliment!

[necron99]

Lukester, I am very grateful for the reply, as I like to read this stuff -- and you're right, I take that as a compliment! I have an as-yet-unpublished 'thematic sequel' -- doesn't involve the same characters, but is set in the same milleu -- so if anyone can promise me a lucrative book deal with movie options, PM me for the sequel!

[jk]

Necron99 -

Great read. Reminds me very much of the satirical writing of the British Sci Fi author John Brunner (The Jagged Orbit, Stand on Zanzibar, The Sheep Look Up) from the early 1970's. Not well known but very competent, humorous yet acerbic, tautly woven and masterful within that genre. His character sketches are extremely rich and carefully drawn, verging on kaleidoscopic casts of characters (heavily ironic and very funny) within a Sci Fi genre where genuine caustic humor is a great rarity.

Your style is a close match for his. Needless to say his writing from 35+ years ago is not dated in the least - it perfectly anticipates the dystopia you also describe. Unfortunately much of his work is out of print but you can still pick easily up the above novels on Amazon used. If you still write or read this genre, he's the best of the lot.

http://www.sfreviews.net/jaggedorbit.html

http://www.eyrie.org/~eagle/reviews/books/1-85798-836-1.html

shockwave rider