Is credit a good thing?

zimmer said:

It's Demokrat Socialist schemes, and the vast majority of the idiocy has been passed by Demokrats. So yes... you can.

Just look at when a program's spending is frozen... they scream like strung pigs.

Obama was asked in 07... what programs would he cut. He couldn't come up with one... except the military.

Look at his disgusting waste... a Trillion of debt plus per year.

Demokrats.

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Sorry, don't see the republican's lining up to cut social security or medicare.

Winchester said:

I don't think you can just blame the democrats for piling up the debt, more of a politician thing than a party thing.

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We can blame liberals, because in a lot of ways, the GOP is every bit as liberal fiscally as the Democrats. We don't actually have fiscally responsible parties in this country.

Winchester said:

We can not pay for everything that is currently being spent with a flat tax w/o hugely adverse consequences for those on the bottom. Having been on both ends of the tax spectrum I'm actually okay with progressive rates even though I now pay 2X more in income taxes than I was even earning 25 years ago and there is no way in hell I'd want to trade financial places with my 25 years younger self. Sure I'd like to pay less in taxes but at what cost for my kids and the future generation who are inheriting a financial disaster.

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It all depends on how you do it. a flat tax with a realistic personal exemption would improve things for those at the bottom. and it could still cover the spending.

Cephus said:

Or people would just have less and the economy would be that of a third world country.

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So...if you own 5 houses, and wanted to sell four, if no one, after years of trying, could afford one...you'd just...resign yourself to sitting on four decaying properties?

KevinKohler said:

So...if you own 5 houses, and wanted to sell four, if no one, after years of trying, could afford one...you'd just...resign yourself to sitting on four decaying properties?

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People simply wouldn't be building as many houses if people couldn't afford to buy them. Instead, you'd see a lot more apartments being built.

Cephus said:

People simply wouldn't be building as many houses if people couldn't afford to buy them. Instead, you'd see a lot more apartments being built.

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And/or smaller houses.

radcen said:

And/or smaller houses.

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And/or worse built houses in undesirable places. Houses have inherent value. Land has inherent value. You can't just slash what you're charging if that falls below what it costs to make them.

Cephus said:

People simply wouldn't be building as many houses if people couldn't afford to buy them. Instead, you'd see a lot more apartments being built.

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Being built....and sold....to who?

radcen said:

Is credit a good thing?

Financial credit. Consumer credit. I.e.: mortgages, auto loans, business loans, credit cards, student loans, "payday" loans, even borrowing from friends or family.

We're talking concept here, as in if we were starting from scratch what we as a society should do, not today's reality.

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Credit at desirable rates--a good credit score--is one of the most valuable things somebody can have. It indicates that you have been responsible and trustworthy, you have a steady income, you pay your debts, and you use credit wisely meaning not excessively. To borrow wisely for one's education, wisely in taking out a mortgage, wisely in buying a car that you NEED, not just want, or using 90-day interest free deals, etc. can all be wise uses of credit. We put almost everything on our credit card--groceries, prescriptions, etc. etc. etc., because we get a generous cash back allowance from our bank who issued the card. BUT. . .we keep track of what we are charging and we pay off that card in full every month so that we pay no interest.

People who max out their credit cards or take the 'everybody gets credit' deals, or who keep adding to their debt are not using credit responsibly and sooner or later that practice bites you in the butt and/or puts you in serious financial straights.

I do support government regulation on credit that prevents usurious interest rates, requires full disclosure, etc. But other than that, it is up to the person to manage his/her finances, including use of credit, wisely.

Winchester said:

Of course it's an argument, you just disagree with it, which is fine, doesn't make it sad... though you can ignore my semi-facetious no one is forcing you to live in san fransico comment. :2razz:

Why should the tax code benefit people who make more costly housing choices over those who choose more moderate options? Why should people who finance a second residence get a tax write off on the mortgage? Those are personal choices.

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You think claiming "No one is forcing the homeowner in San Francisco to live there" is a good argument?

Ok, whatever. I think I'm just to leave it there.

:2wave:

Cephus said:

And/or worse built houses in undesirable places. Houses have inherent value. Land has inherent value. You can't just slash what you're charging if that falls below what it costs to make them.

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Something is worth ONLY what someone else is willing and ABLE to pay.

ttwtt78640 said:

I agree with that (bolded above) assertion. Taxation of income should be based on income level alone - not by how or upon who that income was later spent.

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So you would favor ending deductions for charitable contributions?

I think the tax laws are absurd. However, every reform suggestion I have seen has major concessions to one class of citizen, or special interest group, or another.

Frankly, I'd like Congress to stop screwing with tax laws. Leave everything in place, and build budgets and spending around that.

Instead we have base line budgeting and a never ending drive for revenue, while putting more and more of the tax burden on a smaller and smaller set of people.

That is a fatal policy direction.

KevinKohler said:

Something is worth ONLY what someone else is willing and ABLE to pay.

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Which is why apartments would be built and not houses. People have to live somewhere. If they can't afford to buy houses, they will have to live in apartments.

ocean515 said:

You think claiming "No one is forcing the homeowner in San Francisco to live there" is a good argument?

Ok, whatever. I think I'm just to leave it there.

:2wave:

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Yeah, right, you ignore the point even after I told you the the san francisco part wasn't serious.

ocean515 said:

So you would favor ending deductions for charitable contributions?

I think the tax laws are absurd. However, every reform suggestion I have seen has major concessions to one class of citizen, or special interest group, or another.

Frankly, I'd like Congress to stop screwing with tax laws. Leave everything in place, and build budgets and spending around that.

Instead we have base line budgeting and a never ending drive for revenue, while putting more and more of the tax burden on a smaller and smaller set of people.

That is a fatal policy direction.

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Yes - the federal income tax code should have two numbers: a truely standard deduction (say $20K) and a tax rate (say 20%) applied to income from all sources above that amount.

ttwtt78640 said:

Yes - the federal income tax code should have two numbers: a truely standard deduction (say $20K) and a tax rate (say 20%) applied to income from all sources above that amount.

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I appreciate there are many opinions on what the tax code should look like.

As with everything else, whether it is good or bad depends on individual responsibility.

Winchester said:

We can not pay for everything that is currently being spent with a flat tax w/o hugely adverse consequences for those on the bottom. Having been on both ends of the tax spectrum I'm actually okay with progressive rates even though I now pay 2X more in income taxes than I was even earning 25 years ago and there is no way in hell I'd want to trade financial places with my 25 years younger self. Sure I'd like to pay less in taxes but at what cost for my kids and the future generation who are inheriting a financial disaster.

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I would share your concern, but my concern about millions of people who do not contribute to the federal government's finances while voting to take money out of my pocket is a much larger concern. I believe that we should move to a consumption based tax for the federal government. The more you buy, the more you are taxed. Wealthy pay more, poor pay less. Everyone pays. Everyone can vote.

Cephus said:

Which is why apartments would be built and not houses. People have to live somewhere. If they can't afford to buy houses, they will have to live in apartments.

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But who would buy the apartment buildings? Or would they only be owned by people who contracted to get them built in the first place?

You see, if you go back far enough, with the idea of the removal of the concept of credit...and you end up with almost no rich people. Because almost ALL wealth is, in some form or another, built on credit.

The general concept is fine but I still voted other. The problem is in this environment credit is not playing fair to the concept.

Credit in good faith is fine:

There nothing wrong with the idea of a charge card or a payday loan(advance)
When I open a modest line of credit on my house. It all makes sense.
If I finance a produce with a company which equates to a payment plan, makes sense
When I bid a bond for my business venture which is bought and sold, all is good.

So, what is a bad concept?

A mortgage is awful idea, and not real credit
A bank buys a home, on my assessment of value, then I take in all the legal risks minus the obscure possibility of default where in I still the brunt of the plenty?

It is completely one sided and is not debt. As the risk is all on the buyer and the bank has no real skin in the game except in comparison to other banks.Who can scam the best people!

A credit card is an awful idea, and not real credit
I get a credit line based on my reputation, but with no security we see limits sometimes over what a person makes over the entire course of a year? Just on reputation!

If credit cards were limited to say a paycheque, maybe even a few. Fine. But based on obscure calculations of risk to reward. It is completely one sided and is not debt in good faith. Your basically paying a bank to use its power position to get you more store credit than you qualify…they then bleed you dry...and if that wasn't bad enough, the existence of credit cards stops stores offering real store credit and finance plans, which hurts best aspects of why these exist.

A student loan is an awful idea, and not real credit
Since the banks made a general assessment students generally make more money when educated, they decided to give you huge amounts of money for whatever education you want? Then make you pay fully knowing only a percentage of actual graduates will actually make more money: they profit off failure and success equally?

That is not debt in good faith its a scam. Now if schools paid for specific programs sponsored by specific employers to train specific employee and banks were merely acting as financier for the students. That’s would be an example of a good faith student loan.

A investment loan
Although most people don’t know this, this area is one of the worst not in good faith debt of all. As banks and investors profit at the expense of everyone else.

When an investor be given $1,000,000 worth of investments on maybe a $10,000 worth of “security” it completely distorts valuation in the stock market because that leads to ridiculous ROI based on nothing but manipulation of our debt based currency system and completely blocks out people without the ability to obtain such credit from those type of returns[the majority]. FYI, I speak as someone with access. why give people 10% and me 1000%?

PS: If you think oh but what if you loses that money, depending on its structure the possibility is view as so remote, I can insure it (with the lender) and make 950% with that risk removed. Not to say it a guarantee or even as stable as I am making it sound which is why it is still only done on a limited basis.

Public debt is an awful idea
Governments who don’t balance their budgets should not just get to IOU future taxpayers when they mess up. When you fall short - you have to implement the hard raise. How much of what people now expect government can do on our current tax rate when it is in fact distorted by the fact much of the budget is siting in credit that taken out in the names of citizens who either can’t vote, have not consented or have no idea its going on. This is one of the more criminal bad faith debts as it almost direct fraud.

Fractional reserve lending is an awful idea
Using other people’s money should always be done with their consent not forced upon them! I am sure many would voluntary put savings in a market of low risk investment. Like lending. There is zero excuse to use money that is not yours!!!!

radcen said:

Is credit a good thing?

Financial credit. Consumer credit. I.e.: mortgages, auto loans, business loans, credit cards, student loans, "payday" loans, even borrowing from friends or family.

We're talking concept here, as in if we were starting from scratch what we as a society should do, not today's reality.

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Short answer: Yes.

Longer answer:

Yes, because credit allows people and companies to purchase things they don't have the money for at that moment.
Ideally, the system should prevent people who are not able to repay credit from getting it. An aspect of that is preventing extremely high interest rates - 'predatory lending', I think the term is.

There are noticeable problems with the credit system, but overall I think it helps. It just needs improved.