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What if all debt was forgivin, no new credit issued?

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posted on Mar, 5 2009 @ 12:51 AM
People talk about the credit crunch, but what if all the credit is the problem? Almost everybody owes money on something if not most things that they "own" and most people have a car, a roof, and some luxuries.

If all of our negative balance sheets were increased to zero, what would happen? People would be able to stop paying debtors and start saving for their futures.

With no new credit issued, people would actually have to save (imagine that) to buy the things that they wanted. I believe that most people don't save because they can't afford it due to all of their bills and because the rate of real inflation is higher than the interest rates of their savings accounts.

With no new credit issued, people would be forced to live within their means.

But wait, what about things that spur economic growth like venture capital? Well, you don't owe anything on your house anymore, sell it and use that. Need a factory to mass produce your ice cream? Save the profits from your small operation until you SAVE enough.

Prices would drop for most goods and services. The value of our fiat money would rise.

Of course all debt forgiven with free access to more credit would just encourage more reckless borrowing and spending.

Think about it. If you still had everything you have now, but owed nothing, how much could you save for your retirement? How much could you save to start your own business? How quickly could you save to buy that nice new car with cash? You wouldn't be a slave anymore.

Did we not forgive the German's bill for WWII? We have had an economic war waged against us with compounding interest and amortized loans for a long time. Is it fair that you have to pay $450,000 for a $200,000 house over thirty years?? We need some relief. How many times have you fought with your significant other over the bills? We should have OUR debt forgiven!

posted on Mar, 5 2009 @ 01:23 AM
The whole idea of the stimulus plan was to get people SPENDING. The last plan failed under bush because the majority of people either SAVED the money or paid down their debt. They did not plan for that. They would have preferred us to have bought LCD TVs and such.


This is what they need us to do.

However, I would be all for your plan of reducing all debt to ZERO and no longer issuing credit. Would be a good idea I think, but the PTB won't allow it.

S&F'd though.

posted on Mar, 5 2009 @ 01:28 AM
hmmm, how would the local grocery store get the food in to stock the shelves so YOU can eat?

Do you think that the grocery store pays for the products when they arrive?

No, they are given a line of credit - usually 30-90 days to sell the food then pay the bill.

And your local gas station, how about them? Do you think they pay cash when the truck comes to fill the storage tanks?

Again, credit

and those lines of credit also end up paying much of the company payrolls too.

So unless you want to walk, hungry and broke, you NEED credit flowing in the world.

Nice thought though, unrealistic, but nice

posted on Mar, 5 2009 @ 01:54 AM
It wouldn't be fair to those people who have lived within their means, people who brought Suzukis instead of BMW's, people who brought cheap houses in poor neighbourhoods so they could control their debt compared to people who mortgaged expensive houses in expensive places...

Debt gets erased... Who wins? The very same people who broke the system in the first place... and they get to keep their fancy cars and palaces... sweet!

posted on Mar, 5 2009 @ 01:57 AM
That would rip the bandaid off at least, instead of tearing it off slowly, like we're doing with bonus refund checks, bailouts, and stimulus packages. The outcome is the same, it's only a difference of the duration of pain involved.

I heard on a newscast (I can't recall where), that a psychic predicted that our economy would enter a depression, and that eventually it would lead to all of us getting back to 'basics.'

It would be nice, in a way, but we're afraid of the withdrawals we'll have to go through. As several have posted before me, there would be a lot of suffering to get to that point.

People think the economy is bad because their 401k is gone. I don't think we've seen the worst on this yet. If you watch the newspeople when they talk about the economy, you can see the truth on some of their faces.

posted on Mar, 5 2009 @ 02:01 AM
Global Debt forgiveness could work as a system reset button. There would be winners and losers, but it could be an opportunity to buy some time to reinvent the economic system.

posted on Mar, 5 2009 @ 02:13 AM
This will never work... the companies that lent the money in the first place will loose out, My wife and I are lower middle class people, we have no debt, and own everything we have except for the house we rent.. we both have low income jobs (< NZ$40,000 each), when we want something we will save for it some times taking several years to acomplish but we get it in the end.

So why cant the rest of the world do this... instead of using borrowed money in the form of loans or credit cards why dont you just save for it like us.

The lesson is dont spend money you dont have.. i hate to say it but this is a hard lesson that some MUST learn.

posted on Mar, 5 2009 @ 02:47 AM
try militarily enforced "repo" work equity

credit labor camps.

can't pay back your $20,000 debt?

work it off buddy!


posted on Mar, 5 2009 @ 03:26 AM
reply to post by redhatty

And your local gas station, how about them? Do you think they pay cash when the truck comes to fill the storage tanks?

I don't know about where you live but here where i live. No the gas station do not pay for the gas they recieve all the gas stations here the pumps and storage tanks are owned by the distributor. they actually pay the store owner rent to place the pumps and tanks on their lot. I'm willing to bet that if you talked to the store owners where you live they will tell you the same. that is unless they are small mom and pop gas stations.

reply to post by SuperSecretSquirrel

I wish they would wipe out everyones debt, give everyone a fresh start. and eliminate credit.

But realistically that will never happen.
1st If you forgive everyones debt, your going to put a very large industry out of business. Debt collectors.
2nd Without credit grocery stores will not beable to stock their shelves.
3rd without credit business will not be able to ship there products to the stores.
4th without credit business would not beable to make payroll.
5th without credit business would not beable to pay their bills.
and the list goes on.

whether we like it or not credit will always be around in one form or another. But there are some things we can do to limit the risk of extending credit.

1st. credit cards, payday and car title loans need to be illegal(they are rip offs to begin with)
2nd banks should be stricter in who they extend credit to. whether its a personal loan or business loan they need to make sure the borrower can repay the loan. also the monthly paymentmust be limited to no more than 40% of your income on personal loans. and all loans need to have simple interest. so you know how much upfront you will pay in interest.
3rd the anti trust laws in the U.S. need to be updated to todays standards.
4th Banks, Investment firms and insurance companies should be barred from owning eachother.
5th any bank or investment firm or insurance company that is "TO BIG" to fail needs to be broken up because they are to big to exist.

I'll add more to my thoughts later right now its very late and i've fallen asleep in my chair twice writting this

posted on Mar, 5 2009 @ 03:39 AM
Nearly everything in this world is created using credit.

We are all living on borrowed money, which a lot of people cannot repay.

The market is the way it is today because of one word - profit.

posted on Mar, 5 2009 @ 05:52 AM
I was pointed to this yesterday.

It's a clip of an interview with Michael Hudson, who offers an interesting method of how the Babylonians dealt with their financial problems.

Interestingly it would appear to have been pretty close to the method proposed by the OP.

posted on Mar, 5 2009 @ 06:36 PM
Most businesses that buy merchandise on credit, payment is due within 30 days of receipt and actually get a discount if early payment is received. These businesses are not charged interest on their goods, it is simply an "account payable."

This is not the kind of credit that I was talking about and should have clarified that in the OP.

I am talking about compound interest and amortized loans that sandbag the terms.

These are the types of loans used for regular consumption whether it be credit cards, homes, cars, etc.

The government CAN wipe out the debt but wont because the financial sector would lose a ton and they are the biggest contributors to Washington. The video linked by the person above me was a great summary of how the financial sector acts as a parasite of the production and consumption sector by extracting wealth through interest.

Washington continues to bail out the financial sector and tells us that the economy will collapse if they do not. In reality, the opposite is true. If the production and consumption sector collapses due to debts that cannot be repaid, the financial sector will then collapse because it can no longer support itself by leaching.

So what if all debts were canceled?? No credit issued. Yes, those that have lived within their means would get the shaft but that population is a small percentage. Is it not better for everyone as a whole?

posted on Mar, 5 2009 @ 06:41 PM
This would be an absolutely worst-case scenario. However, if we consider it, it is a feasible possibility to say that the government, especially that in the United States, as we have a treasury and a federal reserve system, could cancel all debt. This, however, would require the nationalization of most credit-creating or using industry. So, I would think this is, on the Doomsday clock, a second away from midnight. An interesting theory, though, nonetheless.

posted on Mar, 5 2009 @ 07:02 PM
reply to post by Iago18

Why would it require the nationalization of most credit-creating or using industries? The credit creating ones would not exist anymore. Credit using ones would be obsolete because no credit would no longer be issued. And what are the credit using industries? Can you be specific?I fail to see your reasoning. Perhaps you could break it down to Elmo level for me?

posted on Mar, 5 2009 @ 07:08 PM
one small reason for any kind of credit to me would be for emergencies.
if your stranded somewhere, or need to buy a generator or you'll lose a years worth of food, etc.

purely for extended emergency in light of obviously having emergency cash stashed away.

posted on Mar, 5 2009 @ 07:18 PM
If they ever do anything like that, give me a heads up so I can apply for some credit and go shopping big time first.

Seriously, this idea would never work. What you are suggesting is allow some people to RIP OFF other people.

That money people owe is other peoples savings! I have never lived on credit. I save, I don't borrow. If they ever tried this kind of jack, I'd freak and start a major riot and burn my neighbors house down. I would not allow my savings to be given to my neighbor so they can get a free house, hell no!!!

Also, not paying your legitimate debt is an IMMORAL ACT! It is also a sin, and I would suspect your REAL christians out there wouldn't be able to sleep at night knowing that you just jacked your neighbors savings .. and, knowing your neighbor is gonna be really mad and will want to burn down your free home, ha.

Nope, this would never fly. People should pay their debts. Those that don't are thieves. And, who would want to live in a nation of thieves!

The day I hear any serious talk going on about this is the day I start collecting glass bottles, flammable fluids, and oily rags .. in preparation for my response for being jack.

Pay your debts ya dead beats out there!!!

posted on Mar, 5 2009 @ 07:25 PM
reply to post by SuperSecretSquirrel

Well... I am an Elmo-level person... so...

As far as I could see it, in order for to government to wipe and reinstate lines of credit, there would have to be outstanding amounts of control to shut down each and every line permanently. It is for this reason that the control must be absolute.

Likewise, I see this as being a possible solution in the US, as the government already has its hands in the credit industry through the Fed and the Treasury. However, there would need to be outstanding control that we have never seen in the United States in order for this to occur.

Thus, this would be a last-ditch solution. IMO

posted on Mar, 5 2009 @ 07:26 PM
reply to post by Divinorumus

It is immoral to be charged outrageous amounts of interest on loans. To be taken advantage of because you couldn't understand how badly you were getting ripped off signing those papers.

Your neighbors wouldn't pay for the debt because the debt was made null. If nobody is taking away from you, what is your issue with this?

The vast majority of those that would lose out is the financial institutions. God knows, I don't want them to know what its like to be out a ton of money.

posted on Mar, 5 2009 @ 07:32 PM
reply to post by Iago18

You state, "wipe and re-instate." I am talking about just "wipe" and make people and businesses save for the things they need and want.

BTW, I would never trust the government with all the credit. What better way to be a slave to the state?

posted on Mar, 5 2009 @ 07:36 PM
reply to post by SuperSecretSquirrel

Well... that would cause the collapse of all civil society. Whereas my "wipe and reset" is basically a last ditch effort... the simple wipe would... well, spell the end of any kind of business.

Yes, I completely understand your point about the government growing and I completely agree with you. But, dealing in the hypothetical, I would see that the government takeover would be the only way for an effective wipe mechanism.

So, I really don't want to be around in a world where either of these possibilities is realized.

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