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There are systemic shocks that you're sweeping under the rug. If most people in a state is underwater on their house and they declare bankruptcy there is a rea

There are systemic shocks that you're sweeping under the rug. If most people in a state is underwater on their house and they declare bankruptcy there is a real economic erosion that occurs. Foreclosed houses get looted, depressed people stop working, already stressed state finances break under the burden of further aid applicants. By saying they'll just "modify their behaviours" you're essentially saying they'll just "go on welfare or become homeless on the street". Most of America is not ready for the next recession, and it is coming at the worst time, when Baby Boomers are starting to strain the retirement and healthcare systems.

ihsw2 9y ago
Paradoxically, economic downturns disproportionately affect the economically advantaged. While the medium and lower classes' financial situations don't need to travel very far to reach the bottom, the rich (and super-rich) will see their income and wealth descend a steeper cliff much more violently. Skilled individuals can seek employment (at least until regional supply is exhausted) whereas wealth does not recover so quickly. What can take a generation to build up would be wiped out within a single fiscal year. War and economic recessions/depressions have a tendency to assiduously devour the rich. To be quite honest, war and economic depressions are the best way to reduce income inequality. The old adage of the tree of liberty needing to (regularly) be replenished by blood seems to apply.