Quote:
Originally Posted by GGG
Think about how easy it is to get a loan for anything, credit cards, washing machine, furniture, hot tubs, etc. These loans are made on having x amount default. And Visa makes interest money up until the point of default.
I think the current debt model relies on people making bad choices so we shouldn't heavily penalize them for doing what the system has designed for them to do. So in general the creditor shouldn't be lending out money to people who have a high likelihood of defaulting. Instead we have creditors pursuing high risk people to get them hooked taking as much out of them until they default.
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Governments and banks are complicit in this. They're so desperate to keep the consumer wheel turning in a climate of long-term economic stagnation that they're using every lever possible to get people to borrow money to fuel spending. That's why it's so ridiculous when the Bank of Canada issues warnings about consumer debt, while driving prime interests rates ever closer to zero.
Unsurprisingly, social attitudes towards debt have changed dramatically. It used to be considered irresponsible to borrow for pretty much anything besides a house. Now middle-class people have no qualms at all about borrowing for cars, furniture, and appliances, and perpetually carrying multi-thousand dollar credit card balances.
I'm not sure what it would take to get people to dread debt again. Massive default and bankruptcy? But is the cure worse than the disease?