Why not max out credit right now?

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gcruwitme's picture
Status: Member (Offline)
Joined: Jun 9 2011
Posts: 13
Why not max out credit right now?

If someone had lines of credit available, why would it not make sense to maximize these at current historic rates and either use that money to be in cash, buy PM's, or foreign currency if the dollar temporarily climbs.

I am worried that credit will soon dry up and make accessing this liquidity difficult or expensive.

What are the upsides and more importantly, what are the down sides.

Assume there to be enough continuing income to service the debt and that the money would be used only to invest, not go on some shopping spree.  Or, if I were to go shopping, use that money for preps.

JAG's picture
Status: Diamond Member (Offline)
Joined: Oct 26 2008
Posts: 2492
Good question.

I used to think taking on more debt would be foolish, but in our current mess, the banks seem reluctant to call in loans or foreclose on mortgages because it means that they have to inject some market reality into their balance sheet. 

Under this scenario, pilfering a weaker (politically and finacially weak) bank for credit might be worth the risk, especially if you can invest in something that will have value in a depressed economy, like the basic necessities of life.

If the banking system goes under, traditional investments will be worthless, so it doesn't make much sense to go this route with your credit. I personally don't expect physical gold to be of much value in this scenerio either, but if it wasn't confiscated it would likely have some value above zero. 

It's worth a ponder, but I'm not sure I would have the guts to act.




docmims's picture
Status: Platinum Member (Offline)
Joined: Jun 17 2009
Posts: 644
Borrowing to secure a water

Borrowing to secure a water supply, ie well. Small solar setup and food supply -- yes.

Borrowing to buy PM -- no.

fiorgodx's picture
Status: Member (Offline)
Joined: Aug 31 2011
Posts: 22
I would support borrowing to

I would support borrowing to buy a small amount of PMs. If you have a home equity line of credit, the interest rate's probably 2-3% right now. Say you took out $5,000 to buy silver, how much do you think that would cost you per month in interest? About $10. Considering the fact that silver is on sale right now due to a mysterious dip, why not hedge your bets by buying a little? If things start collapsing and silver skyrockets, you can make a pretty penny, sell out and buy some land or serious prep stuff. If not, well it only cost you about the price of two starbucks coffees per month.

PastTense's picture
Status: Bronze Member (Offline)
Joined: Dec 13 2010
Posts: 47
Laws can change

Remember that the laws can change. And considering how much control banksters have over the government, it is likely any changes will favor them. I personally would not like to have my wages garnished and my assets seized.

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