4 ms·

The single largest thing we can do is undo the changes to bankruptcy law signed in 2005, it removed bankruptcy as a tool of the poor to discharge excess debt. I

by Aloha 6y ago

The single largest thing we can do is undo the changes to bankruptcy law signed in 2005, it removed bankruptcy as a tool of the poor to discharge excess debt. It's caused there to be very little downside to lending, and lead to an explosion of debt.

ashtonkem 6y ago
Especially since excessive lending usually requires public spending to fix once it gets too bad.
1-more 6y ago
I'm begging on hands and knees for everyone in this thread to read Graeber's "Debt: the first 5,000 years." The notion that debts have to be paid is very odd. If I went to a bank and asked for a loan to bet on a horse, they'd laugh me out of the building. But if they knew that no matter what they could get the money back from me, they'd cut the check. That's where we are right now with non-dischargeable debts. Who holds risk for making loans is not an iron clad law of nature; it's a matter of political will that we have changed over time.
- anitil 6y ago
  I tried hard to read that book, but really struggled to get through it unfortunately. It seemed right down my alley but I couldn't get in to it. Might be time to dig it out and try again
- mannanj 6y ago
  Would you recommend against the newest addition: Debt - Updated and Expanded: The First 5,000 Year or the 2012 release?
  - barry-cotter 6y ago
    Don’t read it. Save your brain for a book that isn’t riddled with so many errors Brad DeLong wrote ten articles on the errors in Chapter 11. https://www.econlib.org/archives/2012/07/hummel_on_graeb.html https://www.econlib.org/archives/2012/07/hummel_on_graeb.htm... > I have read David Graeber’s Debt: The First 5000 Years thoroughly and despite Graeber’s readability, scholarship, and erudition, it is a very bad book. Its tone is much too polemical. More important, when it gets to the more recent history that I know well, it is riddled with errors and distortions. Beyond that, it suffers from serious conceptual confusions, and in his excellent critique, Robert Murphy has only scratched the surface. https://www.bradford-delong.com/2012/02/gabriel-rosser-on-david-graebers-debt-the-first-5000-years.html https://www.bradford-delong.com/2012/02/gabriel-rosser-on-da... >> How the poor debtors still sell their daughters, How in the drought men still grow fat « Code and Culture: At Unfogged there’s a review (and a very funny comments thread) pointing out that the following sentence contains six factual claims all of which are incorrect: > Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages The above is a quote from Debt about Apple. Here is the index of posts about errors in Chapter 11. https://www.bradford-delong.com/.services/blog/6a00e551f08003883400e551f080068834/search?filter.q=Graeber https://www.bradford-delong.com/.services/blog/6a00e551f0800...
- inshadows 6y ago
  I've read first two chapters and had to put it down. The first two chapters clearly outlines the agenda or "the side" of the author. Nothing wrong with that. Authors side is basically debtor: good lender: bad I have empathy for the horrific stories author shares, but my logic was seeking the obvious topic that never came (in those two chapters). What if lenders decided to not lend? Wouldn't that leave those poor souls in Madagascar in even worse position? The book is propaganda.
cwhiz 6y ago
The outcome of that will be that lending standards go up substantially. Significantly higher interest rates and required collateral. The eventual end result is fewer people able to qualify to buy a car, buy a house, get a credit card, or go to college. These are significant drivers of economic activity. It's hard to put the genie back in the bottle.
- Frondo 6y ago
  Offering debt as a way to finance regular life activities like school and housing is also a good way to paper over the other, equally serious problems we currently have in the US, an explosion in the cost of school and housing, compared to what people earn. If people didn't have debt as a way to access these things, there might be more energy for addressing the income inequality and lack of class mobility we have, that's being obscured by the access to debt.
  - cwhiz 6y ago
    Neither side is necessarily wrong here but we changed the law to address the problems you describe. I see this as similar to the payday lending debate. Payday lenders aren’t creating demand, they are responding to it. What happens when we eradicate that form of lending? Most things start from good intentions.
- imtringued 6y ago
  Those artificially low lending standards merely enabled loans that shouldn't exist.
  - cwhiz 6y ago
    This is true but we did it for a reason. Buying a car used to require 35% down, 12-24 month payments, and 10%+ interest. The average price of a new car is around $30,000. What percentage of Americans can afford a $10,500 down payment and a $900 monthly payment? I’d guess less than 15% but it’s just a guess.
    - 6y ago

by Aloha 6y ago

ashtonkem 6y ago

Especially since excessive lending usually requires public spending to fix once it gets too bad.

1-more 6y ago

I'm begging on hands and knees for everyone in this thread to read Graeber's "Debt: the first 5,000 years." The notion that debts have to be paid is very odd. If I went to a bank and asked for a loan to bet on a horse, they'd laugh me out of the building. But if they knew that no matter what they could get the money back from me, they'd cut the check. That's where we are right now with non-dischargeable debts. Who holds risk for making loans is not an iron clad law of nature; it's a matter of political will that we have changed over time.

anitil 6y ago
I tried hard to read that book, but really struggled to get through it unfortunately. It seemed right down my alley but I couldn't get in to it. Might be time to dig it out and try again
mannanj 6y ago
Would you recommend against the newest addition: Debt - Updated and Expanded: The First 5,000 Year or the 2012 release?
- barry-cotter 6y ago
  Don’t read it. Save your brain for a book that isn’t riddled with so many errors Brad DeLong wrote ten articles on the errors in Chapter 11. https://www.econlib.org/archives/2012/07/hummel_on_graeb.html https://www.econlib.org/archives/2012/07/hummel_on_graeb.htm... > I have read David Graeber’s Debt: The First 5000 Years thoroughly and despite Graeber’s readability, scholarship, and erudition, it is a very bad book. Its tone is much too polemical. More important, when it gets to the more recent history that I know well, it is riddled with errors and distortions. Beyond that, it suffers from serious conceptual confusions, and in his excellent critique, Robert Murphy has only scratched the surface. https://www.bradford-delong.com/2012/02/gabriel-rosser-on-david-graebers-debt-the-first-5000-years.html https://www.bradford-delong.com/2012/02/gabriel-rosser-on-da... >> How the poor debtors still sell their daughters, How in the drought men still grow fat « Code and Culture: At Unfogged there’s a review (and a very funny comments thread) pointing out that the following sentence contains six factual claims all of which are incorrect: > Apple Computers is a famous example: it was founded by (mostly Republican) computer engineers who broke from IBM in Silicon Valley in the 1980s, forming little democratic circles of twenty to forty people with their laptops in each other’s garages The above is a quote from Debt about Apple. Here is the index of posts about errors in Chapter 11. https://www.bradford-delong.com/.services/blog/6a00e551f08003883400e551f080068834/search?filter.q=Graeber https://www.bradford-delong.com/.services/blog/6a00e551f0800...
inshadows 6y ago
I've read first two chapters and had to put it down. The first two chapters clearly outlines the agenda or "the side" of the author. Nothing wrong with that. Authors side is basically debtor: good lender: bad I have empathy for the horrific stories author shares, but my logic was seeking the obvious topic that never came (in those two chapters). What if lenders decided to not lend? Wouldn't that leave those poor souls in Madagascar in even worse position? The book is propaganda.

cwhiz 6y ago

The outcome of that will be that lending standards go up substantially. Significantly higher interest rates and required collateral. The eventual end result is fewer people able to qualify to buy a car, buy a house, get a credit card, or go to college. These are significant drivers of economic activity. It's hard to put the genie back in the bottle.

Frondo 6y ago
Offering debt as a way to finance regular life activities like school and housing is also a good way to paper over the other, equally serious problems we currently have in the US, an explosion in the cost of school and housing, compared to what people earn. If people didn't have debt as a way to access these things, there might be more energy for addressing the income inequality and lack of class mobility we have, that's being obscured by the access to debt.
- cwhiz 6y ago
  Neither side is necessarily wrong here but we changed the law to address the problems you describe. I see this as similar to the payday lending debate. Payday lenders aren’t creating demand, they are responding to it. What happens when we eradicate that form of lending? Most things start from good intentions.
imtringued 6y ago
Those artificially low lending standards merely enabled loans that shouldn't exist.
- cwhiz 6y ago
  This is true but we did it for a reason. Buying a car used to require 35% down, 12-24 month payments, and 10%+ interest. The average price of a new car is around $30,000. What percentage of Americans can afford a $10,500 down payment and a $900 monthly payment? I’d guess less than 15% but it’s just a guess.
  - 6y ago