If the Frequently Answered Questions (FAQ) is not available for your board (the link to the FAQ is shown always below each post whilst reading it), send one to Shrewd'm using the contact link
- Manlobbi
Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 3
...get the Proles farther in debt.
Why one of the nation’s largest auto lenders isn’t worried about high vehicle prices or ‘forever loans’
“If I just told you, ‘Car prices going up, interest rates going up, insurance prices going up,’ you would say, ‘You know what, consumers must be paying more as a ratio to the income,’” Capital One Auto President Sanjiv Yajnik told CNBC. “However, if you look at every quintile of salary and earnings of people, the payment-to-income ratio has remained fairly flat.”https://www.cnbc.com/2026/05/09/capital-one-auto-f...Of course, he is talking his book, like everyone else on bubblevision. Even if his point was valid: the bite each payment takes from a Prole's monthly income isn't rising as a percent of income, that is only half the story. The Proles are making each payment, for a much longer period, than was the case a few decades ago. That is the impetus behind 7-8 year car financing, and Pulte's proposal for 50 year mortgages: keep the monthly "manageable", by typical lending standards, by spreading the debt over many more payments. But it's still debt, that will hobble the Prole's spending in out-years.
Steve
No. of Recommendations: 5
But it's still debt, that will hobble the Prole's spending in out-years.
It ain’t the debt that kills you, it’s the endless interest you have to pay year over year over year……
No. of Recommendations: 7
... it’s the endless interest you have to pay year over year over year……
Yep. I believe this year we topped $1T in interest. Imagine what we could do with $1T. Fund healthcare, get a new DDG(X) design launched, repair our crumbling infrastructure...so many things. Instead, we're just burning it.
I realize personal finance is a different animal, but I have a strong aversion to paying interest. I pay credit cards every month, and we bought our ID4 with cash. And, many years ago now, we re-fi'd our home at a lower interest rate and from a 30-yr fixed to a 15-yr fixed (to reduce how long I would have to pay interest). Plus, we made principal payments on top of that. I hate interest payments.
No. of Recommendations: 7
I hate interest payments
On the other hand, consider my parents. They bought a 3 bedroom house in New Jersey for $10,000 in 1950 at a 4% fixed interest rate over 20 years.
By the time they were finished paying it off in 1970, my father’s salary had more than doubled, inflation had made his house worth more than double, the dollars he was paying back with were cheaper, but rents continued to grow throughout the period.
In other words, he came out ahead … way ahead, as did many during that period. (You want to see the real winners, look at those who took a fixed mortgage in 1970-73 before OPEC and Vietnam inflation skyrocketed. They were paying 4% interest in a 13% environment. The banks got killed, that lucky segment made a killing.)
Interest can be good, maybe not this time, not it’s not always bad, either.
No. of Recommendations: 3
Interest can be good, maybe not this time, not it’s not always bad, either.
Yes, it can be good. It can also bury you. Your folks, and -at the risk of being boastful- us, used it well. Of course, hindsight is 20/20. It's easy to look back and say "good move". Basic time value of money...if you pay 4% interest for money, but it gives you 100% (double), that's good.
As I said earlier, personal finance is a bit different to government. Somewhere along the way I learned that one economic theory (I don't remember whose) says deficit spending (and the associated interest) can be OK if it is used to fund healthcare, infrastructure, defense, and such. It actually goes to productive things. A gross oversimplification, and I don't remember all the details, but it's counterproductive to fund tax cuts and corporate loopholes/giveaways.
But, whether personal finance or government, you can't continue to pile on debt (and interest) indefinitely. Eventually the interest will exceed your revenue.
No. of Recommendations: 3
As a follow-up, I did a quick check. The revenue from 2025 was $5.26T. So we're flushing almost 20% of our revenue just on interest.
