• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Should loans be illegal?

Should loans be illegal?

  • Certainly, there is no real need for them.

    Votes: 0 0.0%
  • Yes they should, we can manage without loans.

    Votes: 0 0.0%
  • something else..(explain)

    Votes: 0 0.0%

  • Total voters
    29

Maximus Zeebra

MoG
DP Veteran
Joined
Dec 14, 2006
Messages
7,588
Reaction score
468
Location
Western Europe
Gender
Male
Political Leaning
Other
I just read an interesting article about loans and how they are tightening procedures now and how companies are loaning more than ever. But why do we really need loans? Are they really necessary, or just contributing to the bubbles that we do not need?

Why should people be able to loan their way to afford things they cannot afford? And why should this practice again make other people unable to afford what they really should afford without taking a loan? Because loans bubbles real estate prices. If no one could loan to buy houses, then housing would be adjusted to average savings, but people would need to save money to buy houses and buy houses they could afford, not ones they just loan money for and pay more in interest rates than the real value of the house in a market where people cannot loan to buy. Should a house cost 20-40 years of the average mans life and sweat in the same place?

Am I just completely wrong in this assessment, or are loans in reality completely unnecessary?
 
Last edited:
Loans are the very cornerstone of our consumer economy. Without loans, everyday citizens would find it difficult if not impossible to buy a house or car. Houses cost hundreds of thousands of dollars, putting them simply beyond the reach of millions of people without loans. Car ownership would plummet.
Loans certainly have their downsides, but they not something we can do without.
 
Loans are the very cornerstone of our consumer economy. Without loans, everyday citizens would find it difficult if not impossible to buy a house or car. Houses cost hundreds of thousands of dollars, putting them simply beyond the reach of millions of people without loans. Car ownership would plummet.
Loans certainly have their downsides, but they not something we can do without.

No.. You dont understand what I am saying.. If there was no loans the prices would be much cheaper as compared with now.. House prices would collapse, car prices would collapse.. But people would have to save to buy houses and cars rather than buy it with money they do not have..
But this is impossible now, you HAVE to get loans if you are an average person, to buy something like a house. If the market was more adapted to wages and not loan bubbles and bubbled loan prices for houses, then it would be possible to save your wages and buy a house after perhaps some years of work, if you were a good saver.

Supply and demand and prices, money supply and demand would fall, so would prices for housing.

But why should people be able to buy stuff they cannot afford? Really? Why? Isnt a cornerstone of the American society supposed to be "work hard to earn your ways"?
 
Last edited:
No.. You dont understand what I am saying.. If there was no loans the prices would be much cheaper as compared with now.. House prices would collapse, car prices would collapse.. But people would have to save to buy houses and cars rather than buy it with money they do not have..
But this is impossible now, you HAVE to get loans if you are an average person, to buy something like a house. If the market was more adapted to wages and not loan bubbles and bubbled loan prices for houses, then it would be possible to save your wages and buy a house after perhaps some years of work, if you were a good saver.

Supply and demand and prices, money supply and demand would fall, so would prices for housing.

But why should people be able to buy stuff they cannot afford? Really? Why? Isnt a cornerstone of the American society supposed to be "work hard to earn your ways"?

Consider the amount of money it takes to build a house.

Even if you were to charge just basic cost (labor, materials) and nothing else, most americans would not be able to buy a house.
 
In my view, financial bubbles are created when loan companies no longer are able to recognize the true risk, and then make loans to entities that have a higher potential of defaulting than they recognize. This, coupled with aggressive lending leverages society to a point where, when a normal downturn arrives, exacerbates that problem into a major downturn.

Because it is the nature of financial companies to walk society down this path, it is important that they be regulated. But, loans should remain legal. They serve society's interest by making us more prosperous.
 
I just read an interesting article about loans and how they are tightening procedures now and how companies are loaning more than ever. But why do we really need loans? Are they really necessary, or just contributing to the bubbles that we do not need?

Why should people be able to loan their way to afford things they cannot afford? And why should this practice again make other people unable to afford what they really should afford without taking a loan? Because loans bubbles real estate prices. If no one could loan to buy houses, then housing would be adjusted to average savings, but people would need to save money to buy houses and buy houses they could afford, not ones they just loan money for and pay more in interest rates than the real value of the house in a market where people cannot loan to buy. Should a house cost 20-40 years of the average mans life and sweat in the same place?

Am I just completely wrong in this assessment, or are loans in reality completely unnecessary?

Very interesting...I believe many things would be far better off if we could go back in time and outlaw any form of credit.

Not sure if it is possible now?

many credit debts are constantly unpaid and keep snowballing to form a dangerous economy that could collapse and form a depression far worse than the "Great Depression".... perhaps that is a big part of what is going on today!
 
Should people be free to enter into agreements without approval of the will of the majority?

Maybe in eurotrashland not, but I hope that idiocy never comes to this shore.
 
Should people be free to enter into agreements without approval of the will of the majority?

Maybe in eurotrashland not, but I hope that idiocy never comes to this shore.

basically credit is still a form of the illegal loan-sharking...isn't it?
 
Why should they be illegal? Two entities enter into a legal agreement. Both parties agree to the terms. If the side that can't pay fails to pay **** em.
 
Why should they be illegal? Two entities enter into a legal agreement. Both parties agree to the terms. If the side that can't pay fails to pay **** em.

But the unpaid is exactly what is snowballing the credit/cost increase for the next person...in insurance, etc.

it's a continuing pyramid cycle until somethings got to give.
 
Borrowing/lending money is a responsibility; the primary cause of todays depression is that both parties abdicated their responsibility.
Our Congress may have passed laws making credit easier....too easy for too many.
This is why need need a Congressional Investigation..
Heads will roll.
Back to loaning money; back in the 6th century , as I recall, this was not done at all..:mrgreen:
 
But the unpaid is exactly what is snowballing the credit/cost increase for the next person...in insurance, etc.

So?

it's a continuing pyramid cycle until somethings got to give.

Yeah. People stop asking for loans they can't pay for....:roll:
 
The problem isn't so much the loans on the individual level, but the entire system of credit.

The government is fully capable of printing it's own currency, but chooses instead to contract this dute out to the 'federal' reserve.

The federal reserve LOANS the money at interest... The second that the government stopped printing it's own money, it had sold the american people into bondage... an ever increasing debt that can never be repayed.

Why? Say at present the US owed the federal reserve 100$. Where do they get that 100$? From the federal reserve who is happy to print that 100$, so you pay it back... are you even?? No.. you still owe the interest on that 100$/ Where do you get that interest?? Same place that gave you the debt in the first place.

yes, individuals can be out of debt, or buried by it... but if EVERYONE paid back every dollar they owe at the same time, you'd run out of money first. That's why the only way to keep the economy afloat is to keep the printing presses hot.
 
But the unpaid is exactly what is snowballing the credit/cost increase for the next person...in insurance, etc.

it's a continuing pyramid cycle until somethings got to give.

I love this analogy, I have been using the words "ponzi scheme" in my conversations lately about this financial collapse. Although it is a bit different in exact mechanism, it behaves similarly.

I think the effect is avoidable using regulated, responsible lending.
 
Why should people be able to loan their way to afford things they cannot afford?

Because people are willing to lend them money to do so.

Maximus Zeebra said:
And why should this practice again make other people unable to afford what they really should afford without taking a loan? Because loans bubbles real estate prices. If no one could loan to buy houses, then housing would be adjusted to average savings, but people would need to save money to buy houses and buy houses they could afford, not ones they just loan money for and pay more in interest rates than the real value of the house in a market where people cannot loan to buy. Should a house cost 20-40 years of the average mans life and sweat in the same place?

Am I just completely wrong in this assessment, or are loans in reality completely unnecessary?

You're mostly wrong. Housing prices might come down a little bit, but certainly not as much as you are suggesting. What would most likely happen is that a few wealthy people would simply buy up most houses over time since no one else could afford them, and everyone else would be renters.
 
No, loans need to be legal. Without that ability we'd be marxists, it seems like a dumb overreaction to the current crisis.

I agree with Hatuey completely, if someone, or some business, bites off more than they can chew then **** 'em. That said, the new bankruptcy laws are BS and need to be reformed, along with more investigation and regulation by the govt in the whole financial sector.
 
so loans would be illegal but I still only get paid weekly for my work, or will I start getting paid every minute? Isn't the accrued earnings for my job nothing more then debt?
 
No, loans need to be legal. Without that ability we'd be marxists, it seems like a dumb overreaction to the current crisis.

I wouldn't necessarily go that far. Without the ability to get credit, our economy would be massively shortchanged. Just because credit isn't available doesn't make us Marxists. It just makes us dumb.

I agree with Hatuey completely, if someone, or some business, bites off more than they can chew then **** 'em.

That depends on the circumstance. It would be rather cruel to say that to someone who lacks the intelligence to know what they are getting into. But the morons who decided to buy up all of the bad mortgage backed loans without first diving into see how they were funded are idiots and should be left out to dry.

"let's buy this derivative"
"what's the revenue stream like?
"I don't know, let's buy it anyways!"

Morons...
 
Am I just completely wrong in this assessment, or are loans in reality completely unnecessary?

I'm sure that preventing borrowing for household consumption is a sensible way to decrease the extent of consumerism.

But households shouldn't even be allowed to borrow for investment?

Now that's a great idea if you prefer:
  1. underinvestment in education, health care and housing
  2. a lower standard of living for all but a select few
  3. higher inequality

Maybe someone with a better understanding of economics could correct me if I'm wrong.
 
You know what should be illegal?

You know what should be illegal?

Banks taking FED bail-out funds and not using them to loan or stimulate businesses or qualified borrowers. Using instead the same funds to shore up their own solvency.

The slouch towards Gomorrah continues apace.
:moody
 
Last edited:
Consider the amount of money it takes to build a house.

Even if you were to charge just basic cost (labor, materials) and nothing else, most americans would not be able to buy a house.

But everything would deflate if loans were made illegal, because of principle of money supply in supply and demand of everything.

Why should people afford to buy a house without saving for it anyways?
 
Very interesting...I believe many things would be far better off if we could go back in time and outlaw any form of credit.

Not sure if it is possible now?

many credit debts are constantly unpaid and keep snowballing to form a dangerous economy that could collapse and form a depression far worse than the "Great Depression".... perhaps that is a big part of what is going on today!

Well, I think all in all our societies are worth nothing, because all the values we have, we also have an equal amount of loans, in most capitalist countries.. The norm in say 50 years will not be that people leave fortunes when they die, but rather loans and bad credit.

It could be possible to change, but our economies would have to change majority.

Think about it, all UK growth the last 20 years have been financed by loans, while most before was financed by change and fundamental improvements on the society.. Which is best?
 
Why should they be illegal? Two entities enter into a legal agreement. Both parties agree to the terms. If the side that can't pay fails to pay **** em.

Because its becoming overly unhealthy for our society, and our society is becoming dominated by loans and credit. People buy things they cannot afford, only a tiny minority buys things they actually can afford..
 
Back
Top Bottom