lkar

I had a suspicion our disagreement was definitional. I think manufacturing modifies spending. You are spending money for no reason other than generating miles, by having a credit card swiped in a circumstance where what you get for the swipe will pay for the swipe, eventually. I think there are many circumstances where you put charges on a card that you would not otherwise put on that particular card that are not manufactured spending. I'll give a few examples:

1) You need to spend $10k on your Ink Card in 3 months to get a bonus, but you only have $1k per month in credit card expenses. So, you buy $10k in gift cards and then use those cards over the next 10 months to meet your spending. I would not call this "manufactured spending." You simply shifted your spending in time. I guess under your definition, it would still be "manufactured" in the sense that you didn't want to put that $10k on the card at that time. I would say only that this is a very broad understanding of "manufactured spending" and not the one that I think is common.

2) You would like to pay your mortgage with a credit card. But your lending bank doesn't allow it. You find a technique to use a credit card in a way that will allow you to convert credit card swipes into a method of payment acceptable to the bank at a rate cheaper than the maximum you are willing to pay for points or miles. Again, I don't think the spend here is in any sense manufactured. It is a non-optional expense. I think, for what it's worth, that the ability of people to use new products to do this without large fees is a substantial portion of the current discussion on the board previously known as milesbuzz.

3) You have an recurring expense (let's say your season tickets for the local baseball team). You traditionally pay with a credit card, but, try as you might, you cannot find any credit card company that will give you more than 1 point per dollar. Using techniques, you are able to pay for the tickets by indirectly using a credit card that gives you 2x at grocery stores. This spending is not manufactured.

4) Your property taxes can be paid with a credit card, but only with a 3 percent fee. You think 3 cents per mile is too much to pay. But, using certain techniques, you can get multiple miles per dollar, bringing your cost down to 1 cent per mile, by a series of transactions. Again, I don't view this spend as manufactured.

True manufactured spending is where you are circumventing the fees that the lender must be able to collect to make the system work. I am not, by any means, trying to start a debate on whether this is or isn't ethical. But this is more of the shady art of the credit card game -- that is, credit card banks give bonuses in part because they collect 2 percent fees on swipes. The game with true manufactured spend is to circumvent the fee, pure and simply, by swiping but then getting 100 percent, or near to it, for your swipe, to pay back the loan before it is called. Other than one very generous vendor that is running a competitive system to paypal, when these schemes are rooted out by banks, they are dealt with harshly and swiftly, and it is a very dirty word. Coins were, in a way, "manufactured" spend in this sense, but it was in a circumstance where the government was ok footing the 2 percent bill (or whatever they pay) as the cost of getting the coins in circulation. Some of the current schemes for true manufacturing of spending, which are ironically not discussed on FT, are more underground and devious.