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Or just let interest rates rise and let the problem solve itself.
by throwaway5959 4y ago
Or just let interest rates rise and let the problem solve itself.
- Ekaros 4y agoIsn't that free money too. Higher interest rates means more money for lenders. Thus higher profits.
- throwaway5959 4y agoI’m talking about a higher Fed Funds rate, which does push up other rates but will ultimately end up with the money at the Fed.
- imtringued 4y agoHow does more expensive debt solve the problem? If you are $3000 in debt on your credit card with $300 interest and you repay $80 per month that is roughly $1000 repaid per year so four years to repay this debt. At double the interest it will take five years to pay it off. If your income doesn't rise with the higher interest rate it gets harder to pay off your debt. If you wanted people to pay off their debts it would be better to have lower interest rates with higher minimum monthly payments but more stringent limits (e.g. higher capital requirements) on lending and requirements for borrowing. Make it easier to pay off debt than to get new debt. Your strategy merely boils down to liquidationism, if borrowers default there will be less debt, the consequences don't matter to you.
- throwaway5959 4y agoWould you prefer almost everyone being poorer due to inflation? If you take out debt there’s a presumption that you’ll pay it back. At least there used to be. No one gets a credit card and thinks “oh gee this card’s 29% interest rate is so affordable compared to a 31% interest rate”.