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Forum Post: How you get to be in the 1%

Posted 9 years ago on Nov. 3, 2011, 11:23 a.m. EST by GeorgeMichaelBluth (402) from Arlington, VA
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Thomas Edison said this almost 100 years ago after doing the math on a building project:

 "People (banks) who will not turn a shovel full of dirt on a project nor contribute a pound of material, will collect more money than will the People who supply all the material and do all the work. This is the terrible thing about interest.

I put to you a case study from my industry, housing.

Developer buys, subdivides, and prepares a block of land for sale for $200,000 (cost price $125,000) Builder builds a home for $215,000 (cost price $175,000) A bank creates a mortgage at 7% for thirty years. Interest paid $578,958.24. (that is interest paid, NOT counting the original $415,000 which must also be paid back.)

*Developer profit=             $75,000** *Builder profit=               $50,000** *Bank profit =                   $578,958.24*

So the party that expends no labour or materials makes more than 4x times the profit of the other two combine.

Maybe Edison was on to something........

Be on the receiving end of those freshly printed federal reserve notes and that is how I think the 1% get there, stay there, and ride the little people like its Christmas in Texas.



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[-] 1 points by Agaape (4) 9 years ago

Wel you have to be born rich incredible lucky ore ruthteles without mercy verry selfish ore an parasite who feeds on others and of course the biggest parasites you can find in those 1% you don`t have to look hard for them if youre not one among them be proud an clear consious an pure soul is wurth more than what they have combined all together

[-] 1 points by FreeRadical (157) 9 years ago

Good post.

While I agree that your example is relevant, to most it is simply the cost of doing business through the borrowing of money.

Your example does not demonstrate that fractional reserve lending is not subjectively, rather objectively, a process of counterfeit - fraud - theft.

Thus, your example would do well to include an additional element that, for a 10% fractional reserve requirement, the interest from each loan represents only one ninth of the money collected.


[-] 1 points by technoviking (484) 9 years ago

if the borrower defaults, the $415,000 principal, as well as part of the $579000 interest is poof gone/

[-] 1 points by GeorgeMichaelBluth (402) from Arlington, VA 9 years ago

Yes, when debt is the currency, you can neither repay the debt or default on it- that fucks the game up for the power merchants

[-] 1 points by technoviking (484) 9 years ago

that's why it's called credit, yes?

that's the latin word for 'faith'.

in return for my generosity to advance borrowers money on a promise, they pay me a little sum to compensate for the fact that I now don't have this money to spend on myself.

and also, they pay me a little bit to ensure that if they default, i still have a couple of years worth of interest to crawl my way back up.

[-] 1 points by GeorgeMichaelBluth (402) from Arlington, VA 9 years ago

And people are ok with this?

[-] 0 points by ModestCapitalist (2342) 9 years ago

The ugly truth about the housing market, Countrywide, predatory lending, and the endorsements of Oprah Winfrey, Ellen Degeneres, and Dr Phil. Ch'Ching!

The first subprime loans were issued in 1994. It was a gimmick to sell more homes, artificially inflate the market, sell more homes at higher profits, foreclose on those who could not pay when the ARM rates readjusted, take their homes leaving them with nothing to show for their payments, resell the homes at a higher profit and so on. It was a cruel and calculated plan to sell more homes and artificially inflate the market. Those loans were incredibly profitable for well over a decade before the house of cards finally collapsed. In the meantime, bankers got richer along with the richest one percent who made off with higher dividends. It was a sham.

The biggest player in the game was Countrywide. Endorsed by Oprah Winfrey, Ellen Degeneres, and Dr Phil. If you have their shows from '04' to '06' on tape, watch them again. All three were paid millions specifically to endorse Countrywide by name. The biggest subprime player in the game. They issued more ARM loans than anyone else. Foreclosing on those who could not make their monthy payments when the rates suddenly went through the roof. It was a cruel and calculated plan to sell more homes, artificially inflate the market, foreclose, and resell for a higher profit. The sham worked like a charm for 12 years before the house of cards finally fell in.

At this approximate time the worthless paper was sold to unsuspecting investors.

Oprah, Ellen, and Dr Phil were paid millions for their endorsements. Ch'Ching!