51–60 of 262 posts
This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.
If you take that logic to its natural conclusion HN would shut down.
This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.
The $100 does become a liability on your balance sheet. You’re right that interest doesnt and is an expense. In the context of this post, does it matter? He’s not teaching bookkeeping here. He’s explaining the time value of money.
As such, it's a self indulgent piece of writing, not a helpful one.
This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.
If you take that logic to its natural conclusion HN would shut down.
Unpopular opinion, but I don't think banks should be able to loan out money that's not theirs, and printing money is bad. Gold good, paper bad. But also, gold bad, because clipping. If only there was a solution.
That’s a take! The modern world would collapse in about a week if banks were not allowed to loan out deposits. The ability to satisfy needs now and pay for them in the future is why you can have a house, why governments can build infrastructure, etc. That’s the only reason that banks really exist. Keeping your deposit safe for you while providing convenient access via cards, checks and other rails is just a wonderful…
The housing market has been greatly influenced by the ability to loan vast sums for housing, and without that we would have a very different housing market but we would still have one.
I think banks should lend but it's probably fair that we have controls on lending, and I think we should probably tighten them up especially around housing.
This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.
Yes, at the time of the initial transaction the borrower would not have a liability on their balance sheet that included the interest due. Over the course of the borrowing period the borrower would accrue interest expense commensurate with the passage of time that would increase the borrowers total liabilities. The author misunderstands the fundamental accounting definitions of liabilities (and also assets). Liabilit…
Earlier quoted context omitted.
On a long timescale gold is way more stable than the dollar. Dollar is nonvolatile on a long timescale in the sense the expected returns are negative and it does it reliably at usually anywhere from a return around negative 2-10%. But in terms of price stability gold would be far far far far more stable on anything but the most short-sighted of timescales.
> On a long timescale gold is way more stable than the dollar. This is a nonsense claim. How many flat screen TVs could you buy for a pound of gold over a 'long time scale'? Cancer treatments? Acres of land in midwest? Hours of a normal person's time? The fact of the matter is that you cannot actually store labor or time for later, so the amount of stuff you can get your gold is gonna vary wrt the broader economy. Ec…
You've attacked what could interchangeably be dollar or gold asking what it might buy or store, failing to recognize I was measuring relative stability rather than absolute stability.
The dollar has lost over 95% of its value since inception of the federal reserve (at which time dollars nature changed significantly) in 1913 against some imperfect measures of CPI. That gives you a 20x difference over time, downward. Gold has not perform nearly that bad at price stability.
We could go back further than that when the dollar was a lot more stable... but at that time dollar was backed by gold and there wasn't (mostly) a central bank nor gold possession bans that let them mess with the price quite in the same way they did later.
This is bad, don't read it. When you borrow $100 you do not create a liability which includes the interest to be paid. People who don't understand the very basics of finance and accounting shouldn't write about finance and accounting.
Earlier quoted context omitted.
As a much better alternative, I would recommend "debt" by david graeber, which is amazing.
Graeber is controversial. Archeologists hate how he argues by ad hominem and does not appear to understand the works he cites, to make his argument. I can't speak to his work on finance as a whole. Regarding deep time, his claims about pre-literate society from archeology are not widely supported, they use thin evidence to argue badly. His anarcho-socialism isn't the concern. It's his lack of historicity, and inabili…
Earlier quoted context omitted.
Yes, at the time of the initial transaction the borrower would not have a liability on their balance sheet that included the interest due. Over the course of the borrowing period the borrower would accrue interest expense commensurate with the passage of time that would increase the borrowers total liabilities. The author misunderstands the fundamental accounting definitions of liabilities (and also assets). Liabilit…
Most of the really stupid stuff written is written in good faith. It's not an excuse. There are many good books written about the financial system, accounting, etc. Rather than writing just another (incorrect) blog post, why not point to the good sources of information?