Discuss: Should credit be outlawed? Affording individuals the opportunity to live beyond their means based upon probabilities and risk assessments - good thing or bad thing? The more global the world gets the more crippling the blow problems with credit affect us - would it be better if everyone lived within their means and everything everybody owned was something they actually earned? This is ridiculously hypothetical but I just thought I'd throw this out there.
No, how is anyone going to start a business or buy a house without borrowing money?
You would absolutely crush economies that way. Homes and cars are simply out of reach if they can't be financed. Unlike your country, many college kids finance their way through school. Without it, college would simply be out of the question, especially when you figure the costs for specialties, like doctors.
I don't think credit is a bad thing, just an abused thing.
I don't think credit is a bad thing, just an abused thing.
By saving money from the wages paid for your own labour?DrunkFace wrote:
No, how is anyone going to start a business or buy a house without borrowing money?
Last edited by CameronPoe (2009-09-10 10:55:49)
In this hypothetical alternate reality I would imagine parents would have a special focus on working and saving for their children's third level education. There would also be a market adjustment of the prices of the commodities you mention based on the laws of supply and demand.Agent_Dung_Bomb wrote:
You would absolutely crush economies that way. Homes and cars are simply out of reach if they can't be financed. Unlike your country, many college kids finance their way through school. Without it, college would simply be out of the question, especially when you figure the costs for specialties, like doctors.
I don't think credit is a bad thing, just an abused thing.
Nothing more than Islamic style credit should be allowed (yes I am serious)
I know markets will change when your not able to borrow, but...CameronPoe wrote:
By saving money and doing it the hard way.DrunkFace wrote:
No, how is anyone going to start a business or buy a house without borrowing money?
House prices double approx every 7 years (or 10% a year). The average house price in Sydney is about $500,000 and if you want to live anywhere remotely nice you're looking at $800,000-1mil +. You start out on a good salary of say $50k a year, (lets say after tax to make it easier, which btw would be an awesome salary for any uni grad), about 25k goes in living expenses assuming you live on the bare minimum and rent a shit house apartment miles from anywhere. So you save 25k.... but in that time on average house prices rose by 10% or $50,000. So now after working for a year you are now $25k worse off.
Obtaning money you haven't earned is a deadly sin and you should be castated, stoned and then jihadi jeeped.
Blackbelts are just whitebelts who have never quit.
That would be great in some Utopian world, but that just isn't the case. The cost of land, materials, and labor would simply cost too much to pay for a house outright, and no market supply/demand could adjust for it.CameronPoe wrote:
In this hypothetical alternate reality I would imagine parents would have a special focus on working and saving for their children's third level education. There would also be a market adjustment of the prices of the commodities you mention based on the laws of supply and demand.Agent_Dung_Bomb wrote:
You would absolutely crush economies that way. Homes and cars are simply out of reach if they can't be financed. Unlike your country, many college kids finance their way through school. Without it, college would simply be out of the question, especially when you figure the costs for specialties, like doctors.
I don't think credit is a bad thing, just an abused thing.
Yes, parents should save for their child's education, but rarely do people make enough money to exist, plan properly for their retirement, while also saving enough money to pay for their child(ren's) education. It would be difficult to do with one child, but what if some has 2 or 3 kids, which are normal family sizes.
I've been working for 10 years and I have a good old chunk of money behind me. In the alternate reality I can't imagine it being too much of stretch to own your own house by the age of say 50. Do you view owned housing as a right? Housing is just like an mp3 player: a product to be purchased, no? You don't necessarily have to own an Mp3 player.Agent_Dung_Bomb wrote:
That would be great in some Utopian world, but that just isn't the case. The cost of land, materials, and labor would simply cost too much to pay for a house outright, and no market supply/demand could adjust for it.
Yes, parents should save for their child's education, but rarely do people make enough money to exist, plan properly for their retirement, while also saving enough money to pay for their child(ren's) education. It would be difficult to do with one child, but what if some has 2 or 3 kids, which are normal family sizes.
m3thod wrote:
Obtaning money you haven't earned is a deadly sin and you should be castated, stoned and then jihadi jeeped.
الشعب يريد اسقاط النظام
...show me the schematic
...show me the schematic
Your idea reminds me of the dark ages when the peasants had to rent the land of the nobility, were unable to ever improve their life and just made the rich even richer.
Without the ability to purchase things the people who already own the assets are going to make a killing on rent, and I haven't even started on starting, running, buying or expanding a business.
Without the ability to purchase things the people who already own the assets are going to make a killing on rent, and I haven't even started on starting, running, buying or expanding a business.
I'm not stating a position one way or the other, I'm leaving this open for debate - inviting comment on the relative advantages/disadvantages.DrunkFace wrote:
Your idea reminds me of the dark ages when the peasants had to rent the land of the nobility, were unable to ever improve their life and just made the rich even richer.
Without the ability to purchase things the people who already own the assets are going to make a killing on rent, and I haven't even started on starting, running, buying or expanding a business.
That's fine, but you're also single. A quick Google search pulled these results. Based on the median income within the US, the wage chart ranges from $39,100-65,800. These figures are based on a household with two children, and the chart shows the per child cost. The cost from birth to legal age of 18, not including college education, was $170,460 per child. That comes down to $341,000 to raise two children to age 18. Given inflationary costs costs, just how exactly do you expect a family to save for the full cost of their children's education, and put away enough to buy a home outright.CameronPoe wrote:
I've been working for 10 years and I have a good old chunk of money behind me. In the alternate reality I can't imagine it being too much of stretch to own your own house by the age of say 50. Do you view owned housing as a right? Housing is just like an mp3 player: a product to be purchased, no? You don't necessarily have to own an Mp3 player.Agent_Dung_Bomb wrote:
That would be great in some Utopian world, but that just isn't the case. The cost of land, materials, and labor would simply cost too much to pay for a house outright, and no market supply/demand could adjust for it.
Yes, parents should save for their child's education, but rarely do people make enough money to exist, plan properly for their retirement, while also saving enough money to pay for their child(ren's) education. It would be difficult to do with one child, but what if some has 2 or 3 kids, which are normal family sizes.
http://moneycentral.msn.com/articles/fa … dscost.asp
Your thinking is also backwards. Most people buy homes while they are raising their children, not at age 50. Since homes will increase in value over time, many people use homes as part of their retirement fund. In fact, home ownership ends up accounting for about 60% of the money people will use for their retirement. Once the children are gone many people sale their homes and go to something less expensive, like a condo. They take the extra money left over from the sale of their home and use it for retirement.
Sorry, but the elimination of credit simply is not feasible. Getting people to stop abusing credit and getting in over their heads is what is needed, and teaching children early on in school about finances is the best way to address this.
Last edited by Agent_Dung_Bomb (2009-09-10 11:38:58)
I think you should be able to have credit up to a certain limit, and then you get cut off.
Kind of like not passing a law to lower the requirements because supposably it discriminates against the less wealthy.
Kind of like not passing a law to lower the requirements because supposably it discriminates against the less wealthy.
That's what banks are meant to do. Take your income, and secured assets into consideration to determine how much to lend. And it works fine, until you get people trying to defraud the system.
So the rich get progressively richer and better educated, the poor stay where they are?CameronPoe wrote:
In this hypothetical alternate reality I would imagine parents would have a special focus on working and saving for their children's third level education.
There's nothing wrong with credit used properly.
Provided
Interest is not usurious
Credit isn't advanced to people who are certain not to repay it
People don't take credit they know they'll never repay
Banks don't lend out more than they have on deposit
There should be no problem.
In fact credit is a good thing as it allows people to get what they need when they need it, and spread the cost over their lifetime.
If people use credit to buy holidays or designer handbags then by all means jihadi-jeep them.
Fuck Israel
The problem isn't that credit is available, it's that stupid people who have big eyes and can't pay their bills can get credit. It's not the banks fault these people have no self control or fiscal sense.CameronPoe wrote:
Discuss: Should credit be outlawed? Affording individuals the opportunity to live beyond their means based upon probabilities and risk assessments - good thing or bad thing? The more global the world gets the more crippling the blow problems with credit affect us - would it be better if everyone lived within their means and everything everybody owned was something they actually earned? This is ridiculously hypothetical but I just thought I'd throw this out there.
You want to punish everyone for the stupidity of a few? Yikes.
Last edited by JohnG@lt (2009-09-11 06:50:01)
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
-Frederick Bastiat
FixedIt's not the peoples fault these banks have no self control or fiscal sense.
Fuck Israel
It's the fault of the people at the end of the day. The basic mindset needs to change. Maybe strapping C4 onto an FAV and ramming it into them will do the trick
I don't see anyone putting a gun to these peoples heads and telling them to accept the credit card offers. It's not the banks fault, it's the people accepting the cards who are at fault. It's the people taking out a loan on a house they can't really afford's fault.Dilbert_X wrote:
FixedIt's not the peoples fault these banks have no self control or fiscal sense.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
-Frederick Bastiat
Very hypothetical but still and interesting thought ...
I believe there should be an absolute roof as to how much money you could borrow, lets say twice your yearly income ... that was pretty common in the old days in Norway and then prices went up, banks discarded their old twice your income policy and the race was on ...to bad really seeing as it drove the housing market even higher ...
I never have and never will borrow money for any other purpose than buying a house or a car ... and that would be a house I could pay down in no more than 15 years ...
I believe there should be an absolute roof as to how much money you could borrow, lets say twice your yearly income ... that was pretty common in the old days in Norway and then prices went up, banks discarded their old twice your income policy and the race was on ...to bad really seeing as it drove the housing market even higher ...
I never have and never will borrow money for any other purpose than buying a house or a car ... and that would be a house I could pay down in no more than 15 years ...
Wait behind the line ..............................................................
I wouldn't have made in into uni without my govt. funded admission/course costs (considered a HECs debt) which I pay back interest free at a rate dependent upon my income. No job = no forced repayments, at all. But once I do start earning they take 5-10% of my salary until it is paid off. Again interest free.
The $30,000+ AU cost isn't something I could have paid upfront as soon as I finished high school. And I doubt my parents could have done so either, with mortgage + the rest of the family to look after.
I agree that home loans should be treated differently, homes could easily accommodate 3 generations of the same family, but society places the want/need for a home of your own with a mortgage above that.
Higher education is something nearly all students go into debt for. And if not them, then the parents are hit with a sizeable loss in savings. Student loans are necessary, without them you are left with a middle-lower class citizenry that a family can't escape from.
The $30,000+ AU cost isn't something I could have paid upfront as soon as I finished high school. And I doubt my parents could have done so either, with mortgage + the rest of the family to look after.
I agree that home loans should be treated differently, homes could easily accommodate 3 generations of the same family, but society places the want/need for a home of your own with a mortgage above that.
Higher education is something nearly all students go into debt for. And if not them, then the parents are hit with a sizeable loss in savings. Student loans are necessary, without them you are left with a middle-lower class citizenry that a family can't escape from.
I don't see anyone holding guns to the heads of bankers and forcing them to send out fliers to people they haven't researched offering them credit cards with $25,000 credit limits, or forcing them to hand over hundreds of thousands of dollars to people who will never repay it.I don't see anyone putting a gun to these peoples heads and telling them to accept the credit card offers. It's not the banks fault, it's the people accepting the cards who are at fault. It's the people taking out a loan on a house they can't really afford's fault.
I do see a lot of bankers taking highly risky steps in the knowledge they will reap the bonuses if it goes right and someone else will bear the cost if it goes wrong.
I also see banks loaning many times more than they have on deposit - pretty much the definition of imprudence.
Fuck Israel
Gotta love Fiat money. I'm all for bringing back the gold standard that would limit banks to lending out only as much as they have in deposits. It would force them to be more prudent when choosing who to lend to. But this is considered 'unfair' to poor people who wouldn't have as much access to credit.Dilbert_X wrote:
I don't see anyone holding guns to the heads of bankers and forcing them to send out fliers to people they haven't researched offering them credit cards with $25,000 credit limits, or forcing them to hand over hundreds of thousands of dollars to people who will never repay it.I don't see anyone putting a gun to these peoples heads and telling them to accept the credit card offers. It's not the banks fault, it's the people accepting the cards who are at fault. It's the people taking out a loan on a house they can't really afford's fault.
I do see a lot of bankers taking highly risky steps in the knowledge they will reap the bonuses if it goes right and someone else will bear the cost if it goes wrong.
I also see banks loaning many times more than they have on deposit - pretty much the definition of imprudence.
Pick your poison: A) Credit limited to only those who can be trusted to pay it back while making it more difficult for poor people to get the credit many people think they need to get ahead in this world or B) System we have now where poor people have relatively easy access to credit and can purchase a home in their lifetime. I vote option "A" but Barney Frank & Friends will always choose option "B" because it's more 'fair' to their voting base.
"Ah, you miserable creatures! You who think that you are so great! You who judge humanity to be so small! You who wish to reform everything! Why don't you reform yourselves? That task would be sufficient enough."
-Frederick Bastiat
-Frederick Bastiat