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Serious economic contraction.
Not paying your bills is in essence saving. If everyone saves, there is less spending. Consumer spending is a large part of our economy, and much of that spending is on credit. If we went cash only, there probably isn't enough cash to run our economy at a decent level.
How about everyone still paying for actual services like electricity, fuel, communications and food but just stopped paying student loan, credit card and auto loan debt while still paying the mortgage. What would happen if the stock market traders had to pay cash instead of borrowing to finance margin purchases? What would happen if the banks refused to loan corporations to buy back their own stock?
I expect we would have a much more rational economy as the excess loans disappeared.
How about everyone still paying for actual services like electricity, fuel, communications and food but just stopped paying student loan, credit card and auto loan debt while still paying the mortgage. What would happen if the stock market traders had to pay cash instead of borrowing to finance margin purchases? What would happen if the banks refused to loan corporations to buy back their own stock?
I expect we would have a much more rational economy as the excess loans disappeared.
A mortgage is a non-excess loan but margin debt is not?
How about everyone still paying for actual services like electricity, fuel, communications and food but just stopped paying student loan, credit card and auto loan debt while still paying the mortgage. What would happen if the stock market traders had to pay cash instead of borrowing to finance margin purchases? What would happen if the banks refused to loan corporations to buy back their own stock?
I expect we would have a much more rational economy as the excess loans disappeared.
Maybe not so severe as the first, but still very serious economic contraction.
But irrational? Sure there are bogus loans and bad bets on lending/debt since the beginning of time. But debt creation and debt service is a very big money making business. This is where most of our money is created, and the risks of lending are baked into interest rate returns.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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It would help reduce unemployment, with more people being hired as debt collectors, for shutting off utilities, repossessing, foreclosures, and court processing people to do the judgements and attach wages. Companies would not allow customers to go for long without paying their debts.
How about everyone still paying for actual services like electricity, fuel, communications and food but just stopped paying student loan, credit card and auto loan debt while still paying the mortgage. What would happen if the stock market traders had to pay cash instead of borrowing to finance margin purchases? What would happen if the banks refused to loan corporations to buy back their own stock?
I expect we would have a much more rational economy as the excess loans disappeared.
That would be a punk move.
Steal the car etc.
A much more rational economic move would be to not GRANT the loans in the first place.
Let's start with stopping the trillions borrowed from The Fed.
Ncole1:Yes! Most people need a mortgage to buy living space. Nobody needs a loan to buy stocks. They can pay cash. This single change would just about put an end to market speculation that turns all equity markets into casinos to the detriment of risk averse investors. If the speculators want to gamble they can go to Monaco where the big boys play.
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