A World Without Debt

[DucatiMonster696]

exactly. anyone can go down to the government bank and get an interest free loan. sharia law does work!

Under Islamic banking laws interest is replaced with banking fees. However fees are just used in a more direct fashion as method used to convey the risks behind a loan just as interest rates (be they high or low on a given loan) convey the same costs for risk.

As for the OP, the way I view debt is that is nothing more than a tool. However just like any tool (fire for example) it can be abused if not used wisely and with appropriate caution.

Additionally the real issue is not debt itself but the ability to manage and sustain debt without accumulating long (or short) term negative results that may far outweigh any benefits of incurring debt. That being said one individual or single business miring themselves in debt is not as bad a large group of individuals or businesses doing the same.

However when you throw in government into the equation than the issue becomes slightly more complicated because a government which has lost control of its ability to rein in debt and/or its ability sustain its debt is a far greater threat than the previously mentioned groups. The reason being is often it is government who is the only entity that really has the ability to link and lump everyone together in a proverbial basket of eggs regardless of their consent.

Thus when governments rely on debt to heavily for their ability to maintain their functions, or to grow itself out, or worse that debt is used to influence markets in the face of already overwhelming amounts of debt you begin to have a situations where the costs begin to outweigh the benefits. This of course never happens over night because typically these issues take decades to manifest themselves and when they do they are essentially so huge and overwhelming that there is not much one can do in the face of a government debt tsunami.

 

[LegendKiller]

Money As Debt

People in debt aren't free...Those are monetary slaves.
debt free people could go anywhere they choose - to the north, to the south, west or east...

People in debt can not do that - they have to work - WORK MAKES YOU FREE...after you pay off your debt....

LOL. You work to live, if you choose to bring your future living into the present to live better today there is nothing unfree about that. It is simply a choice.

As far as debt being unnatural, that's just silly. Why should I wait for 10 years to save up for a house when I can borrow somebody else's money and buy it now while giving them small amount of interest?

As far as student loans, the debt isn't the problem, the terms of the debt is the problem.

You are blaming something that's been around for a long time, successfully, for the problems when the rules of the game changed recently.

Allow dischargability and see how quickly things change. Also bring back FFELP and require underwriting to degree/school and see how quickly things change.

The single biggest problem is that there is no risk based pricing in government student loans. Bring in RBP and you'll see things quickly come back into equilibrium.

 

[Attic]

As a quick consideration, what would happen if everyone was frugal with their spending and paid off all their debt before making any big purchases? Our economy would contract to a significant degree, this is what QE has tried to keep from happening by tricking people into thinking they have more purchasing power and keeping the system (an economy built on 60-70% consumer spending) humming close to peak efficiency.

Buy or die.


Debt, like anything it requires some balance, otherwise it's devastating.

Consider a small model of what occurs with the banking system.

3 People each with 100 dollars, one of which is granted powers of a bank.

The 2 people with a hundred dollars want to borrow money, 50 each at 5% interest. How soon, or how many yearly cycles of borrowing before the bank has all the money in the 3 person system? All the money ends up at the bank.

We have to pour money into this, our, system to keep banks from having everything, and that's what we effectively do through fractional reserve banking and money creation. Through fractional reserve banking each deposit is amplified by nearly a factor of 10 when it gets lent back out into the system. So dumping/depotsiting 100 dollars into the system can result in 1000 new dollars. The banks have the power to create money in our system. Inflation is an essential grease to keep friction from grinding this setup to a halt.

Government may actually be a solution to this if you consider granting them the ability to give loans and then destroy interest repayments along with balancing money creation.

Too Big to Fail or Too Important to Fail, everybody has seen how much was done to save the banks. They have immense power over the well being of the country. The same banks who stick it to Americans wherever they can. The Federal Reserve is the most important bank, and it is as federal as federal express, that is to say it's privately owned.

Regardless, as we sit today, debt is the only thing keeping many many people afloat, it just happens to double as an anchor in many cases. Debt is a very powerful tool to those who can stick people in debt, so there are very creative and powerful forces to lock folks into debt.

Web of Debt is a decent book on the topic.

 

[SparkyJJO]

We are prisoners to our indebtedness. We may not realize it nor acknowledge it but we are.

Debt serves it's purpose only as a means to an end but some decide to stay and reside within the indebtedness "vicious circle". You cannot control a country nor society but you CAN control what you do ...

Debt free since 2005 and loving every minute!

Nearly the same here. I have under $2k left on my student loans and I'm done.

Well, until I buy a house... Good luck buying that in cash at least the first time around

 

[Vaux]

We need Tyler Durden.

 

[Doppel]

Imagine that debt didn't exist as it did.

Debt has benefits, and we would miss out on them.

But credit also destroys lives. A lot of people can't control their spending when giving easy and free access to credit.

And there are the hidden negatives of debt, where it hurts even those who use it responsibly. For example, see the housing crisis, or see education costs. College costs have increased immensely, due to easily available student credit.

So imagine a world much like our own, without debt as we know it. Legally, you could lend a person money, but there would be no legal framework to ever recover that money, no garnishing wages, no credit reports, no denied jobs due to poor credit.

Some things would be very different, IMO. For example, I believe housing would be cheaper. Without mortgages, homes would only sell if they were truly affordable for the buyer, pushing prices down. And with home prices lowered, rental prices would have to be reduced to be competitive with home ownership. Maybe more people wouldn't be able to buy homes, but I don't see that as a serious problem.

College education would be cheaper without the upward pressure of easy cheap loans.

Impulse purchases and such would have to wait until you actually had the money. I don't see the drawback for this, except for sellers that rely on selling to people who can't really afford to buy except for via credit.


I can see one potential complaint. "Why would the government get in our business and tell us we can't use credit, the government shouldn't interfere!" Thing is, credit and debt only exist as they do because of government laws and regulations allowing them to exist. In the absence of contract laws allowing the credit system to exist, anyone could still be a lender but any legal expectation of getting your money back would be gone.

The natural state is a market without debt, not with.

Quoted for financial ineptness.

Gawd, it is no wonder you were so heavily pimping the Bitcon stuff if this is the kind of way you see debt. I wish you'd made this post much earlier so I could have discarded everything you said about money even faster.

 

[Chiropteran]

A lot of people seem to be of the opinion that debt, particularly credit card debt, only hurts stupid people, so it's fine and good.

The problem is that when stupid people are taken advantage of, everyone pays the price. Your taxes are going towards health care, food stamps, government housing, etc. In addition, these "stupid people" who get themselves stuck with crippling debt and can't work end up making less money and paying less taxes than they would otherwise.

In the end, even if you personally NEVER pay a cent in credit card interest directly, you are still paying thousands or tens of thousands of dollars a year in additional taxes because of other's inability to control credit card debt.

As well, for every dollar lost by some stupid person in credit card fees or interest, a bank is earning that extra dollar. This magnifies the wealth imbalance, which in turn pushes things to absurd prices.

 

[dud]

A lot of people seem to be of the opinion that debt, particularly credit card debt, only hurts stupid people, so it's fine and good.

The problem is that when stupid people are taken advantage of, everyone pays the price. Your taxes are going towards health care, food stamps, government housing, etc. In addition, these "stupid people" who get themselves stuck with crippling debt and can't work end up making less money and paying less taxes than they would otherwise.

In the end, even if you personally NEVER pay a cent in credit card interest directly, you are still paying thousands or tens of thousands of dollars a year in additional taxes because of other's inability to control credit card debt.

As well, for every dollar lost by some stupid person in credit card fees or interest, a bank is earning that extra dollar. This magnifies the wealth imbalance, which in turn pushes things to absurd prices.

What about a society that allows (not necessarily stupid) people to get deep into debt (to include back taxes, etc.) and simply hire a lawyer to wipe most, if not all of it away? The rest of us ultimately pay for this irresponsibility.

 

[Mai72]

There seems to be people who think we need another war to fix our debt. I have friends who tell me to watch out for Syria. This war is going to escalate into a world war and when it's over all of the world'd debt will be set back to zero.

The market needs stability and it's anything but stable. The US is in debt. Europe is in debt. We need to make sure that the US stays the reserve currency?

http://www.youtube.com/watch?v=f6iT9ARaJWE

 

[Doppel]

There seems to be people who think we need another war to fix our debt. I have friends who tell me to watch out for Syria. This war is going to escalate into a world war and when it's over all of the world'd debt will be set back to zero.

The market needs stability and it's anything but stable. The US is in debt. Europe is in debt. We need to make sure that the US stays the reserve currency?

http://www.youtube.com/watch?v=f6iT9ARaJWE

I hope you got your friends to write this prediction about Syria down so that when Syria doesn't turn into WWIII you can know next time not to listen to them

 

[OverVolt]

Quoted for financial ineptness.

Gawd, it is no wonder you were so heavily pimping the Bitcon stuff if this is the kind of way you see debt. I wish you'd made this post much earlier so I could have discarded everything you said about money even faster.

Both college AND houses would be cheaper without credit. When FHA was started in 1934 I think a house was around $800. Even adjusted for inflation that is like $20k.

 

[Doppel]

Both college AND houses would be cheaper without credit. When FHA was started in 1936 I think a house was around $800. Even adjusted for inflation that is like $20k.

Yes, they would be cheaper, and far less people would have them and/or they'd have small ones. As said above debt is a natural thing among humans and it has always been around and always will be. Saying a world could exist without debt is like a world without humor or speech. It's ridiculous.

 

[Kwatt]

I hope you got your friends to write this prediction about Syria down so that when Syria doesn't turn into WWIII you can know next time not to listen to them

Not WWIII but still a big boom.
https://www.youtube.com/watch?v=4GQRf1auUMc


.

 

[Chiropteran]

Oh Doppel, still have you ignored. Didn't even notice you posted until someone quoted you. I see you haven't changed, no need to change my ignore lists.

 

[Doppel]

Not WWIII but still a big boom.
https://www.youtube.com/watch?v=4GQRf1auUMc


.

That is a damn huge bomb. Par excellence there is the parroting of allah akbar, as we see in all these videos.

Oh Doppel, still have you ignored. Didn't even notice you posted until someone quoted you. I see you haven't changed, no need to change my ignore lists.

I don't have you on ignore, Chiro, because your posts are so idiotic I enjoy mocking them. That's why I'll never put you on ignore, and never stop mocking them.

 

[LegendKiller]

Both college AND houses would be cheaper without credit. When FHA was started in 1934 I think a house was around $800. Even adjusted for inflation that is like $20k.

How big was the average house? How energy efficient? How many new technology features?

That's akin to comparing the cost of a mid 90s Accord to the cost of a current accord and saying "well, shit, loans made the prices more expensive" when a mid-90s accord only has the name in common with the current vehicle.

 

[SparkyJJO]

Debt within reason is fine.

The "within reason" part is what far too many people have a problem grasping.

 

[s0me0nesmind1]

A lot of people seem to be of the opinion that debt, particularly credit card debt, only hurts stupid people, so it's fine and good.

The problem is that when stupid people are taken advantage of, everyone pays the price. Your taxes are going towards health care, food stamps, government housing, etc. In addition, these "stupid people" who get themselves stuck with crippling debt and can't work end up making less money and paying less taxes than they would otherwise.

In the end, even if you personally NEVER pay a cent in credit card interest directly, you are still paying thousands or tens of thousands of dollars a year in additional taxes because of other's inability to control credit card debt.

As well, for every dollar lost by some stupid person in credit card fees or interest, a bank is earning that extra dollar. This magnifies the wealth imbalance, which in turn pushes things to absurd prices.

You are correct - it is hurting people that aren't a part of the debt. And that is what conservatives have been preaching since the dawn of time.

Did you dig yourself a ditch? Find your own fucking way out of it. We didn't dig it. If you need help, we can give you employment - but we can't write a fucking check and make it magically disappear like pixie dust. As if to say "Oh, my bad. I know I fucked up with the first $5,000 - so I'll just give the same explanation for the other $75,000 in CC debt - oh and the house I can't pay for - oh and the car too."

Apparently liberals see it differently, you can see how far that gets them (*COUGH* Detroit, Chicago, LA, Washington DC, San Diego, and Baltimore *COUGH* - Oh shit, surprise surprise, all of those are liberal mecca bungholes). At least it pays off for many of us when it comes to retirement.


On another topic, this is why it all rolls back around to the "If you are so against the rich, why do you insist on feeding them a buffet?" As if it isn't a choice. Go figure.

 

[Attic]

There seems to be people who think we need another war to fix our debt. I have friends who tell me to watch out for Syria. This war is going to escalate into a world war and when it's over all of the world'd debt will be set back to zero.

The market needs stability and it's anything but stable. The US is in debt. Europe is in debt. We need to make sure that the US stays the reserve currency?

http://www.youtube.com/watch?v=f6iT9ARaJWE

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin ...”
Ernest Hemingway