Bring Home the Bacon (before it's gone!)
I just read an interesting article that has got me thinking...
Here is the article: http://onlinejournal.com/artman/publish/article_4274.shtml
And my thoughts: We are paying 8% to the banks when our own family members can't even earn 5% on their investments -- and are more likely losing money. I wonder if communities should start pulling money out of the market and investing locally -- loaning their money locally / backed by real property of other people in our community. Bring the money back home before it is all siphoned off!
Let me elaborate.... As an example. My sister has a house. Let's say she owes the bank $200,000 and is paying 7%. My Grandma lives in a retirement community, which she pays for off the interest on her investments. They used to bring in maybe 10%/yr. Now, they are losing money. And at the rate we're going, could lose a lot more. What if my Grandma 'invested' in my sister instead of the market. Even if my sister only paid Grandma 5%, Grandma would be making more on her money than she is currently and my sister would also save.
Or they could arrange to vary the return based on what the banks are paying with a range of 5-7%. If the banks pay less than 5%, Grandma is earning better than she could otherwise. If the banks ever pay more than 7% (don't hold your breath), well my sister is also 'protected.'
But that is not the only way she is protected. If my sister defaults because she CAN'T pay, Grandma won't take her house away, but she might move in since she can't afford the retirement community anymore (no income from my sister) and she has a right to because of her lien (option to repossess) on my sister's house. My sister likely can't pay because she's out of work, so she'll have some time to help take care of Grandma.
Now if my sister's loan was with the bank, the bank would take it back. If my Grandma's money is eaten up by market declines, she can't go live at the bank. So Grandma is protected to. One might envision a lot of scenarios like this among relatives, friends and community.
THIS is what it means to invest locally.... dump the middleman with his fingers in your pocket and take care of your own. That may be all we can do if we face potential collapse. But we will have to make those arrangements before the hammer drops. Think about it...
Here is the article: http://onlinejournal.com/artman/publish/article_4274.shtml
And my thoughts: We are paying 8% to the banks when our own family members can't even earn 5% on their investments -- and are more likely losing money. I wonder if communities should start pulling money out of the market and investing locally -- loaning their money locally / backed by real property of other people in our community. Bring the money back home before it is all siphoned off!
Let me elaborate.... As an example. My sister has a house. Let's say she owes the bank $200,000 and is paying 7%. My Grandma lives in a retirement community, which she pays for off the interest on her investments. They used to bring in maybe 10%/yr. Now, they are losing money. And at the rate we're going, could lose a lot more. What if my Grandma 'invested' in my sister instead of the market. Even if my sister only paid Grandma 5%, Grandma would be making more on her money than she is currently and my sister would also save.
Or they could arrange to vary the return based on what the banks are paying with a range of 5-7%. If the banks pay less than 5%, Grandma is earning better than she could otherwise. If the banks ever pay more than 7% (don't hold your breath), well my sister is also 'protected.'
But that is not the only way she is protected. If my sister defaults because she CAN'T pay, Grandma won't take her house away, but she might move in since she can't afford the retirement community anymore (no income from my sister) and she has a right to because of her lien (option to repossess) on my sister's house. My sister likely can't pay because she's out of work, so she'll have some time to help take care of Grandma.
Now if my sister's loan was with the bank, the bank would take it back. If my Grandma's money is eaten up by market declines, she can't go live at the bank. So Grandma is protected to. One might envision a lot of scenarios like this among relatives, friends and community.
THIS is what it means to invest locally.... dump the middleman with his fingers in your pocket and take care of your own. That may be all we can do if we face potential collapse. But we will have to make those arrangements before the hammer drops. Think about it...
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