| Subject: | Re: [socialcredit] Bonds, dues, dividends | | Date: | Thursday, February 23, 2006 21:03:28 (-0800) | | From: | Joe Thomson <thomsonhiyu @....ca>
|
(Joe Thomson wrote:-) . Businesses routinely fund their ongoing
'operations' by way of 'debt' (bank loans). The bulk of bank financing is
for just that purpose.
>
(Jeff Smith replied:-) > I've read otherwise. If you could source your claim
...
(Joe replies:-) Take a look at the Annual Report of most publicly traded
companies. In most cases, I think you'll find there will be mention of "an
operating line of credit", and how much of it remains unused. Smaller
firms, often ones with little or no long-term debt, regularly depend on
either a pre-arranged "line-of-credit", for which I believe there is usually
a small 'stand-by' charge, or short-term loans arranged as needed to enable
them to lay in an inventory before an expected busy sales period. Such as
at Christmas, for instance.
Throughout the north central parts of Canada, forest products companies,
large and small, have a very narrow period when the muskeg surrounding
forest lands is frozen solid enough to allow transport of timber from woods
to mill. During that short period they have to get in their entire year's
wood supply. (You have similar circumstances in some parts of the US ~ the
California High Sierra, for instance, where there is only a short summer
logging season before the massive snowfalls up there prevent any woods
activity.)
The companies borrow short-term to fund this inventory build up. And repay
the loans over the year, as their lumber, or pulp, or OSB, etc., is produced
and sold. There is nothing 'unhealthy' about this, it is normal business
practice, without which those industries wouldn't be able to function and
our entire economy would be that much the poorer.
And there are parallels to it everywhere, in virtually every industry, and
wholesale and retail distributing, too. You can't sell from an 'empty
shelf', Jeff. People want what they want, when they want it. And to
provide that takes operating capital beyond that which most firms have
available from their own reserves..
>
|
Re: [socialcredit]
Reply to this message