4 ms·

Instead of giving money, why not suspend debt payments and interest growth?

by sethammons 7y ago

andylei 7y ago
because some people might need to buy food
- deleted 7y ago
  [deleted]
graeme 7y ago
The debt payments go to someone. Suspending those still creates a cashflow hole. I haven’t fully thought through the effects of handing out cash, just wanted to point out that suspending debts isn’t costless. Landlords would reduce spending, and banks might slip into crisis. And what of those with no debt, but who can’t work due to virus? Or those with debt, but who can’t work? They still need to eat.
davis_m 7y ago
Does it have to be one or the other?
koheripbal 7y ago
Because then the banks will go under. The government isn't the recipient of loan payments.
- tlbsofware 7y ago
  Hmm unless they buy the loans and we have to pay the government for that... doesn’t sound like it would work but I’m curious of what the economists here think of that
rjsw 7y ago
I suspect it will need a bit of both.
aaaa324234 7y ago
You would also have to suspend payments for food, paying rent, child care, health care, heating, ... The list of potential things that has to be suspended is endlessly large and by picking winners you are potentially creating a moral hazard. Rich homeowners with mortgages get bailed out while renters who have missed one payment may miss their second and third one and then get thrown out.
Frost1x 7y ago
In my opinion, it feels more like damaged image management to me. Direct cash flow to citizens gives immediate association to the source of the cash and helps restore faith in the current US economic system and government, or at least makes people a little less cranky to soften the blow. People want change and these issues are further highlighting massive systemic problems in the US to the population at large who are already looking for significant change. To most, a onetime $1000 (the idea that was floating, this could be different) may pay one months rent or part of it to some, but it's not going to help when it comes to layoffs and downsizing businesses are sure to follow up with. To me, the elephant in the room will be medical expenses many are sure to incur and their associated fallout that's going to be very hard to make people forget.
- dsfyu404ed 7y ago
  The point is that that one month's rent may buy enough time for the economy to stabilize. Make no mistake, unless everything picks back up nearly instantly (aka "when pigs fly") people will lose jobs and miss payments and be evicted and all sorts of other bad things just like in every other downturn. The point of the $1k (or whatever amount) is to buy a month for the COVID19 situation to stabilize thereby minimizing the downturn, or at least that's how it works in theory.
bargl 7y ago
If you give money (enough to cover debt payments etc). It's the same thing but you can keep taxing people who can pay debt without problem.
- hosh 7y ago
  Huh, I just realized tax season is coming up soon.
  - erik_seaberg 7y ago
    Postponed for federal and some states: https://news.ycombinator.com/item?id=22608290 https://news.ycombinator.com/item?id=22608290
aoeusnth1 7y ago
You’re suggesting a handout to house owners (especially those with large houses) over renters would be better?
- 23B1 7y ago
  Both would be better, obviously. And I don't think any house owners are looking for debt forgiveness, I think they, like renters, know that an economy where there are no jobs but debt is still owed is unsustainable.
duxup 7y ago
I feel like that would advantage folks who have a lot of debt ... who in fact might actually be not in need of assistance as it might otherwise seem.
deleted 7y ago
[deleted]
deleted 7y ago
[deleted]
smileysteve 7y ago
> suspend debt payments and interest growth? You could do this with the major banks and associations, but poorer Americans are already unbanked and have no available credit. In addition, where a major component of our economy is housing and that's a major concern; there are many private landlords that depend on that income; targeting just landlords with a credit would require an entire amdministration. One of the goals of UBI is it cuts the bureaucracy. Instead of a person or group of people deciding who benefits how, it goes to everybody indiscriminately.
rokhayakebe 7y ago
Actually, we should be paying Interest only for the next few months. The Principal should be deferred.
maerF0x0 7y ago
Giving money universally benefits people universally. Suspending debt payments only benefits those who (irresponsibly?) took on lots of leverage.
ksec 7y ago
I think someone pointed this out in a recent discussion that handing out money is literally 100x simpler than fiddling with debt payment, interest collection and other sort of fianicial tools which may have unforeseeable consequences.

Instead of giving money, why not suspend debt payments and interest growth?

andylei 7y ago

because some people might need to buy food

deleted 7y ago
[deleted]

graeme 7y ago

The debt payments go to someone. Suspending those still creates a cashflow hole. I haven’t fully thought through the effects of handing out cash, just wanted to point out that suspending debts isn’t costless. Landlords would reduce spending, and banks might slip into crisis. And what of those with no debt, but who can’t work due to virus? Or those with debt, but who can’t work? They still need to eat.

davis_m 7y ago

Does it have to be one or the other?

koheripbal 7y ago

Because then the banks will go under. The government isn't the recipient of loan payments.

tlbsofware 7y ago
Hmm unless they buy the loans and we have to pay the government for that... doesn’t sound like it would work but I’m curious of what the economists here think of that

rjsw 7y ago

I suspect it will need a bit of both.

aaaa324234 7y ago

You would also have to suspend payments for food, paying rent, child care, health care, heating, ... The list of potential things that has to be suspended is endlessly large and by picking winners you are potentially creating a moral hazard. Rich homeowners with mortgages get bailed out while renters who have missed one payment may miss their second and third one and then get thrown out.

Frost1x 7y ago

In my opinion, it feels more like damaged image management to me. Direct cash flow to citizens gives immediate association to the source of the cash and helps restore faith in the current US economic system and government, or at least makes people a little less cranky to soften the blow. People want change and these issues are further highlighting massive systemic problems in the US to the population at large who are already looking for significant change. To most, a onetime $1000 (the idea that was floating, this could be different) may pay one months rent or part of it to some, but it's not going to help when it comes to layoffs and downsizing businesses are sure to follow up with. To me, the elephant in the room will be medical expenses many are sure to incur and their associated fallout that's going to be very hard to make people forget.

dsfyu404ed 7y ago
The point is that that one month's rent may buy enough time for the economy to stabilize. Make no mistake, unless everything picks back up nearly instantly (aka "when pigs fly") people will lose jobs and miss payments and be evicted and all sorts of other bad things just like in every other downturn. The point of the $1k (or whatever amount) is to buy a month for the COVID19 situation to stabilize thereby minimizing the downturn, or at least that's how it works in theory.

bargl 7y ago

If you give money (enough to cover debt payments etc). It's the same thing but you can keep taxing people who can pay debt without problem.

hosh 7y ago
Huh, I just realized tax season is coming up soon.
- erik_seaberg 7y ago
  Postponed for federal and some states: https://news.ycombinator.com/item?id=22608290 https://news.ycombinator.com/item?id=22608290

aoeusnth1 7y ago

You’re suggesting a handout to house owners (especially those with large houses) over renters would be better?

23B1 7y ago
Both would be better, obviously. And I don't think any house owners are looking for debt forgiveness, I think they, like renters, know that an economy where there are no jobs but debt is still owed is unsustainable.

duxup 7y ago

I feel like that would advantage folks who have a lot of debt ... who in fact might actually be not in need of assistance as it might otherwise seem.

deleted 7y ago

[deleted]

deleted 7y ago

[deleted]

smileysteve 7y ago

> suspend debt payments and interest growth? You could do this with the major banks and associations, but poorer Americans are already unbanked and have no available credit. In addition, where a major component of our economy is housing and that's a major concern; there are many private landlords that depend on that income; targeting just landlords with a credit would require an entire amdministration. One of the goals of UBI is it cuts the bureaucracy. Instead of a person or group of people deciding who benefits how, it goes to everybody indiscriminately.

rokhayakebe 7y ago

Actually, we should be paying Interest only for the next few months. The Principal should be deferred.

maerF0x0 7y ago

Giving money universally benefits people universally. Suspending debt payments only benefits those who (irresponsibly?) took on lots of leverage.

ksec 7y ago

I think someone pointed this out in a recent discussion that handing out money is literally 100x simpler than fiddling with debt payment, interest collection and other sort of fianicial tools which may have unforeseeable consequences.