First Post - Credit Scores (why the world is as screwed up as it looks)

The first post is supposed to be special, right? Screw that. It's going to suck like all the rest of them. Why are you even reading this? There's interesting stuff on YouTube, go there.

For an illustration of why the world we think we live in has to come crashing down around our ears and start paying attention to reality, skip the balloon boy, the US Government, and all the other really crazy stuff on YouTube and read this:

Here is some info from my FICO report:

To improve your score the following areas should be addressed:
1. Too few active mortgage accounts (Reason 48)
2. Too many inquiries (Reason 22)
3. Bankcard account balances are too high in proportion to credit limits (Reason 06)
4. Too few recently opened bank installment accounts (Reason 41)

It says, in easy to understand English, that:

1: I haven't borrowed enough money.
2: I've been thinking about borrowing money, and that's bad. (I haven't - no applications for at least two years)
3: I have borrowed too much money.
4: I haven't borrowed enough money.

 Ok, I want to point this out, because many people think the banks have some arcane knowledge, and that in *their* world, all of this makes perfect sense. NOPE. It's just as stupid as it seems. BUT - this is the reality that governs the financial markets. So here it is: my score was lowered because I borrowed too much money and because I didn't borrow enough money.

 One more time, but first let me say: I don't care about my FICO score. I'm not borrowing money anymore. Ever. So it doesn't matter. I'm shooting for zero as a FICO score, because it will make me proud, but otherwise I could care less. So now here it is in case you missed it: My score was lowered because I didn't borrow enough money, and because I borrowed too much money.

 In their world this makes sense. It can't, because reality doesn't work that way. Aha! They don't deal with reality (they will... but they don't just yet). Here's a dull and boring story to explain my point. Yes, it is *both* dull and boring (and made-up).

 Bernie Madoff was doing almost the same thing the big banks are doing. he took money and simply spent it, rather than invest it for clients. When someone wanted to withdraw some of their funds, he gave them some of the money he had sitting around. No problem - until everyone wants theirs at once.

 The big banks of today have an accomplice - the Fed. So they can do one better than Bernie Madoff. When they want money, they simply create it. So, even if every investor wants their money at once, it's not a problem - they just create some more and give it to them.

 "But Trevor," you say, "where does this money come from? They can't create value out of thin air!"

 I didn't say they create value, I said they create *money*. The value comes from *other* money. For example, the dollar bill in your pocket. If you're in a room with four people, three of whom have a dollar, and one that has three ice cream cones he's selling for a dollar each, what happens when one guy suddenly creates $5 out of thin air, and adds it to his original buck? Well, maybe he'll be nice and let you buy an ice cream cone for a dollar, but maybe not. Maybe he'll decide he wants all three ice cream cones, and he'll pay $2 each for them. You can't pay $2, because you only have the one. So the guy selling ice cream cones has a choice: be nice, let you and your buddy buy an ice cream cone for a dollar each, and maybe get another dollar from the banker (that's the guy with the brand new money), or sell all three to the banker and get $6. I can't even be mad at the ice cream vendor, I'd have a hard time taking two dollars and an ice cream cone instead of $6. But remember, the guy with extra money that came out of thin air didn't create value - the ice cream vendor had the same three ice cream cones either way. The same amount of wealth... but different people get to enjoy it.

 So the point I'm trying to make with my late-night drunken ramblings, is that THE FED IS STEALING OUR ICE CREAM!!!

 And that's just wrong.

 - Trevor. (My name is Trevor Peck, thus the stupid blog name)

p.s. I skipped a lot of important things here, but that doesn't mean I don't know about them (I might not), or that I'm wrong (I'm not). It just means I'm too lazy to point it out. It means that maybe if I could I would just create dollars out of thin air and live off of your efforts, but I don't have those kind of connections. Plus, I'm a good guy and would feel guilty while enjoying my ice cream. Chocolate tastes good with ice cream. Guilt - not so much. So complain in the comments, and I'll back up my statements.

After I've finished all my ice cream.

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