Documentaries recommended by the CM community
Another fairly recent one:
Not sure if it might have already been mentioned on this thread: “The secret history of credit cards”- it’s at least 5 years old, but that kind of makes it even more interesting. I sure learned a few things that I wish I knew when I was a bit younger…plenty of stuff here to make your blood boil.
a very worthwhile watch indeed.
It doesn’t matter in the least that it was made in 2004 as its relevants is compounded further by the experiences of 2008 on …
For years I’ve always felt that the banking industry was nothing less than a Venus Fly Trap!
Here’s a website I follow frequently in the UK :-
Money Saving Expert
… and I have at hand a copy of a book by the creator of the website who is regularly on BBC radio and TV :-
Martin Lewis – ‘The Money Diet’
As the financial crunch has escalated, so the book has dated somewhat, yet its premise remains consistent. Here’s a snippet from page 362 :-
” Credit Card Interest Rate 17.9% (pretty Standard)
Outstanding Balance £3000
Minimum Payment: The higher of 2% or £5.
Initial £60 minimum payment
£3000 debt at 17.9% minimum payments at 2%
1 Month £60
2 Months £59.60
12 Months £56
60 Months (5 years) £41
120 Months (10 years) £28
240 Months (20 years) £14
360 Months (30 years) £6
The amount repaid quickly drops. As the payments get smaller the interest continues to compound. Meaning that if you never spent on the card again and just made the minimum repayments, it would take 40 years and 5 months to pay off the debt and cost £6300 in interest. “
Instead of downloading the film , I found a copy at Google video :-
The Secret History Of Credit Cards
I find the “Secret History of Credit Cards” just a bunch more whining. It was also incredibly biased to the left. Just listen to all the words used to describe the credit card industry. They use words that villify the banks and credit card companies and make out card holders as victims. It’s a push for more goverment interference in markets. More interference for problems created by the government in the first place.
At the very beinging of the program they describe why did the credit card industry moved to Nebraska, because the government had artificially set interest rates. They said the banks were borrowing at 20% but limited to charge 12%, so it was move to a favorable state or go under.
The root of the problem was a quote from one of their consumers at 10:15, “It’s nice to be able to spend what you don’t have.”.
The only thing I found in the entire program that I might agree with was the changing of interest rates after a purchase, everything else I think is reasonable for a company to do. Consumers are not forced to spend money they don’t have. They aren’t forced to use credit cards. Banks are not forced to issue the credit cards. It’s a voluntary agreement and both should be held responsible for their actions. If the consumer borrows money they can’t pay back then they may have to declare bankruptcy and face the consequences. If the banks lend money to consumers and don’t get paid back, then they may go bankrupt as well. The market will take care of this.
They compare the industry to loan sharking which is a very poor comparision. In loan sharking, if you fail to pay back the loan you are threatened with injury or death. There is no such threat here. If you fail to payback your loan, you get a bad rap (credit score) and people won’t lend you money again which is exactly what should happen since you are clearly a bad risk. There is no debtor prision. The loans are unsecured.
It’s time for people to take responsibility for their own actions, and very soon I believe we will be forced to do so.
I’ll try and demistify the film with reference to the Crash Course. Inflation took a belt to the United Kingdom between 1948 and 1970 with the cost of living rising at a value of some 250%. Between 1970 and 1995, the cost of living rose a further 350%. Where as a median earner in 1970 could support his family on a single wage, by 1995 this had become almost impossible without a second wage to support the average household. In other words, financing the present by borrowing away the future has acted as an added wage earner to the average UK family. In essence, credit card debt has escalated since the mid 80’s.
There is no difference between the United States and the United Kingdom in regard to credit card debt …
I’ll leave you with the transcript to chapter 10 of the Crash Course and its accompanying film to help aid digestion, with an understanding that any further discussion between us is left to private message so as to help maintain this thread.
Most of us think of inflation as rising prices, but that’s not quite right. Inflation is not caused by rising prices. Rising prices are a symptom of inflation. Inflation is caused by the presence of too much money in relation to goods and services. What we experience is things going up in price, but in fact, inflation is really the value of your money going down, simply because there’s too much of it around. Inflation is, everywhere and always, a monetary phenomenon.
From 1665 to 1776 there was absolutely no inflation. For 111 years, a dollar saved was, well, a dollar saved. Can you imagine what it would be like to live in a world where you could earn a thousand dollars, put it in a coffee can in the backyard, and your great- great grandchildren could dig it up and enjoy the same benefits from that thousand dollars as you would have 111 years previously? This was reality in the US at one time.
What does it mean to live in a world where your money loses value exponentially?
We’ve got one more Key Concept to share before we launch into current economic conditions, and it concerns inflation.
Most of us think of inflation as rising prices, but that’s not quite right. Imagine if an apple and an orange are a dollar each one year, but ten dollars each next year. Since you enjoy eating apples and oranges the same in one year as the next, then the only thing that’s truly changed here is your money, which has declined in value.
Inflation is not caused by rising prices. Rising prices are a symptom of inflation. Inflation is caused by the presence of too much money in relation to goods and services. What we experience are things going up in price, but in fact, inflation is really the value of your money going down simply because there’s too much of it around.
Here’s an example: Suppose you are on a life raft and somebody on board has an orange that they are willing to sell for money. Only one person in the raft has any money, and that’s a single dollar. So the orange sells for a dollar. But wait! Just before it sells you find a ten dollar bill in your pocket. Now how much do you suppose the orange sells for? That’s right, ten bucks. It’s still the same orange right? Nothing about the utility or desirability of the orange has changed from one minute to the next, only the amount of money kicking around in the boat. So we can make this claim: Inflation is, everywhere and always, a monetary phenomenon.
And what’s true within a tiny life raft is equally true across an entire nation. Here, let me illustrate this point using a long sweep of US history.
What we’re looking at here is a graph of price levels in the United States that begins on the left in 1665 and progresses more than 300 years to 2008 on the right. But at this moment, only inflation over the period from 1665 to 1776 is marked on the chart. On the “Y” axis, what is being charted are price levels, *not* the rate of inflation. Now, you might ask, “How can we compare prices in 1665 to prices in 1776, let alone 2008? Life was so different between those periods.” While there are some obvious liberties that have to be taken here, what is being compared are the basics of life. People ate food in 1665 as they did in 1776. People had to transport themselves, get educated, and live in houses in 1665 as they did in 1776. So what is being compared is relative cost of living in one period to the next. That is, inflation.
In 1665, the basic cost of living was set to a value of “5”. What is most striking about this chart to me is that from 1665 to 1776 there was absolutely no inflation. For 111 years, a dollar saved was, well, a dollar saved. Can you imagine what it would be like to live in a world where you could earn a thousand dollars, put it in a coffee can in the backyard, and your great- great grandchildren could dig it up and enjoy the same benefits from that thousand dollars as you would have 111 years previously?
This isn’t a fantasy in a cheap novella, this was reality in our country at one time. The country was on a silver and gold standard during this period and advanced tremendously while enjoying near-perfect price stability during times of peace. However, along came a war, the Revolutionary War, and the country found itself unable to pay for the war with the gold and silver to be found in the Treasury.
So a paper currency called “continentals” was printed, and at first it was fully backed by a specified amount of real gold and/or silver in the Treasury. But then the war proved to be more expensive than thought, and more and more was printed. Then the British, aware of the corrosive effects of inflation on a society, started counterfeiting and distributing vast amounts of bogus continentals, and soon the currency began to collapse.
Before long, massive inflation took hold, and Abigail Adams complained bitterly about this experience, noting that goods were hard to come by, making life difficult.
Seen on the inflation chart, the Revolutionary War took the general price level from a reading of “5” to a reading of “8”. After the war, the paper continentals were utterly rejected by the populace, who strongly preferred gold and silver. Most interestingly, price levels promptly returned back to their prewar levels.
The next serious bout of inflation was also associated with a war, again due to overprinting of paper currency, and again, upon conclusion of the war, we saw a relatively prompt return of prices to their pre-war levels, where they stayed for an additional 30 years. By now we are nearly 200 years into this chart, and we find that the cost of living is roughly that same as it was in 1665. That’s a truly fascinating concept to entertain.
But then a war came along – the Civil War – and it was a doozy. To finance the war, the North had to resort to printing a type of currency that still lends its name to our own currency today. Of course, back then it really did have a “green back.” Again we see a rapid rise of inflation as a direct consequence of war that again returned to baseline after the crisis was over. We are now 250 years into this story and the cost of living is still roughly the same as it was at the start. Can you imagine?
But then another war came along, this one even bigger than any before, and again it was a highly inflationary event.
And then another war, even bigger than any before it, which again proved inflationary. But this time, something odd happened. Inflation did not retreat before the next war began. Why? Two reasons. First, the country was no longer on a gold standard, but instead a fiat paper standard administered by the Federal Reserve, and the populace did not have another form of money to which it could turn. And second, because this was the first time that the war apparatus was not dismantled upon conclusion of hostilities.
Instead, full mobilization was maintained and a protracted cold war was fought; certainly as inflationary a conflict as any shooting war ever was.
And now if we look at the entire sweep of history, we can make an utterly obvious claim: All wars are inflationary. Period. No exceptions.
Why? Simple, really. Any time the government engages in deficit spending, it creates the conditions for inflation. However when the deficit spending is on legitimate infrastructure, such as roads or bridges, that investment will slowly “pay for itself” by boosting productivity and paving the way for the creation of additional goods and services that will ‘soak up’ the extra cash over time.
Wars, however, are special. Vast quantities of money are spent on things that are meant to be blown up. The money stays at home, while the goods get sent off to be blown up. When a bomb blows up, there is no residual benefit to the domestic economy later on. This means war spending is the most inflationary of all spending. It’s a double whammy – the money stays behind, working its evil magic, while the goods disappear. Heck, even if the goods aren’t blown up, there’s practically zero residual economic benefit to such specialized hardware, as amazing as that technology may be.
For some reason, the most recent pair of wars have been presented by the US mainstream press as being relatively “pain-free” for the average citizen, despite overwhelming historical odds to the contrary.
In fact, on this 15-year-long chart of commodity prices, we observe that prices bounced in a channel, marked by the green lines, for more than 10 years. However, and now hopefully unsurprisingly, shortly after the start of the Iraq War commodity prices began marching higher and have inflated nearly 140% in the five years since. Your gasoline and food bills will confirm this.
So if anybody tries to tell you that you haven’t sacrificed for the war, let them know you sacrificed a large portion of your savings and your paycheck to the effort, thank you very much.
At any rate, back to our main story. Here’s inflation between 1665 and 1975. Knowing what you now know about Nixon’s actions on August 15th 1971, what do you suppose the rest of the graph looks like between 1975 and today?
This is your world. You’ve been living on the steeply rising portion of the graph for so long that that you think it’s level ground.
Because inflation is now a permanent feature, and because it advances at a percentage rate, your money is declining in value exponentially.
That’s what this “hockey stick” graph is telling you.
What does it mean to live in a world where your money loses value exponentially? You know what it means, because you live there. It means always having to work harder and harder just to stay in place, and it means perplexing and astoundingly risky investment decisions have to be made in an attempt to grow ones savings fast enough to avoid the ravages of inflation.
It means two incomes are needed where one used to suffice, and kids left at home while both parents work. A world of constantly eroding money is a devilishly complicated world to navigate and leaves scant room for error, especially for those without the appropriate means or connections.
And it doesn’t have to be this way. And indeed, for the majority of our country’s history it wasn’t. And I’m hard pressed to say that inflation is a necessity and serves some essential and greater good, because a lot of progress and advancement happened between 1665 and 1940 without the “benefit” of perpetual inflation.
The point of this section was to help you appreciate the fact that our country has not always lived under a regime of perpetual inflation, and that, historically speaking, it’s a rather recent development.
To help put all of this in context, let’s mark the moments when our country abandoned the gold standard, first internally and then completely.
It may have surprised some of you, as it did me, to find out that inflation is not a mysterious law of nature, like gravity, but rather an extremely well-characterized matter of policy.
So now we have our fifth Key Concept: Inflation is, everywhere and always, a monetary phenomenon.
Flipped a bit, we can say that inflation is a deliberate act of policy.
Here’s what one wag had to say about this matter: “Paper money always returns to its intrinsic value – zero.” Of course, he was a bit too pessimistic in his assessment, as this German woman proves by using her furnace to liberate the intrinsic heat content of paper money.
John Maynard Keynes, the father of the branch of economics that utterly dominates our lives, had this to say about inflation:
Lenin was certainly right, there is no more positive, or subtle or surer means of destroying the existing basis of society than to debauch the currency.
By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of the citizens.
The process engages all of the hidden forces of economics on the side of destruction, and does it in a manner that not one man in a million can diagnose.
Given that the destructive, corrosive effects of inflation are so well understood by the architects and administrators of our monetary system, it’s fair to wonder exactly what the plan here is.
Now, finally, here in Chapter Ten of the Crash Course, we can string together these three important dots:
#1: In 1971, the US, and by extension the world, terminated the last connection to a gold restraint and federal borrowing “turned the corner,” never to look back.
#2: Concurrently, the money supply “turned the corner” and started piling up at a rate much faster than goods and services were growing.
And so we get to data point #3, which is that inflation is the fully predictable outcome of data points #1 and #2.
Boom. Boom. Boom. One, two, three. All connected, all saying the same thing, with profound implications for our future.
Now, if you’re of a mind that there’s no reason that all three of these graphs cannot just continue to exponentially accelerate to ever-higher amounts without end, then there’s no point in watching the rest of the Crash Course.
However, if you don’t happen to believe that, then you’re going to want to see the rest of this.
There is literally nothing more important for you to be doing right now than gaining an understanding of how these pieces fit together, assessing the risks for yourself, and taking actions to prepare for the possibility of a future that’s substantially different from today.
Now that we’ve covered compounding, money, and inflation, you have the tools to get the most from the remaining sections of the Crash Course.
Crash Course: Chapter 10 – Inflation
While I absolutely agree with you about people needing to learn to be accountable for their own actions, (and that some people deserve the predicament they end up in) the point I take issue with (many of which were uncovered in this documentary) is that without question, the credit card industry is cloaked in the secrecy and trickery of their fine print. You cannot deny that as a simple fact.
It is hard to find. A local library in my area has a VHS copy: “The Greening of Cuba.” It is a wonderful documentary about post Soviet Cuba stepping up to the challenges of no more oil, ag. subsidies, tractor parts, chemical fertilizers… It is definitely propagandistic, in that I’m sure the Cuban government had to approve it’s content. It’s probably paints a much rosier picture than real events. However, the basic story is pretty amazing.
EVERYONE! YOU HAVE TO WATCH “ENRON: THE SMARTEST GUYS IN THE ROOM.”
This is a case study in what is happening to our national and global economy. I’ve watched it several times. Anyone who is interested in Dr. Martenson’s work should really see it.
I’d recommend “Food, Inc.” and “King Corn”, both available on Netflix.
My wife and I watched “No Impact Man” this weekend. The idea is that a NYC-based writer (and his wife and infant daughter) are going to try and live a lifestyle that’s as close to zero-impact as possible — buy/eat local foods (I believe within 250 miles), try and create zero garbage, walk/bike/scooter (no elevators), and for six months they live without electricity even (although he does eventually hook up a wee PV panel to power his laptop). Of course it’s ultimately far from “zero impact” but they give it a good go. The most interesting thing in the movie IMO is the relationship between the writer and his wife (she’s pretty unenthusiastic at first) and the film isn’t shy about showing how it stresses their relationship.
All in all, worth 90 minutes of my life. It’s currently available on pay-per-view where we are (upstate NY) and I assume on netflix as well…
Viva — Sager