6 ms·

I'm a sheltered young guy but I always thought a bank shouldn't be a business (in the sense as Walmart is a grocery store or Taco Bell is a fast food restaurant

by morjom 4y ago

I'm a sheltered young guy but I always thought a bank shouldn't be a business (in the sense as Walmart is a grocery store or Taco Bell is a fast food restaurant). And if they are, the government should be staring over the banks shoulder all the time. I also feel like credit is doing less good than bad and should be done away with. I can see myself changing my mind but this is how I feel right now.

cdot2 4y ago
Most people would never be able to buy a house without credit. Along with many other reasons why credit is necessary.
- notch898b 4y ago
  I'm not saying there is anything wrong with credit but the ol latin american method of buying a house one brick at a time does work. You may have to buy the land all at once, but even where I live (top 10 city) that's doable for roughly what a down payment costs.
- wildrhythms 4y ago
  The concept of 'buy a house' is predicated on many other systems that make credit 'necessary'. Why do you think a person needs to 'buy a house' at all?
  - dns_snek 4y ago
    > Why do you think a person needs to 'buy a house' at all? Because people need a place to live, it would be helpful if you stated which alternatives you have in mind? Renting for the rest of your life? Building a house, paycheck to paycheck? Something more radical, like abolishing private housing and give every citizen a place to live, for free?
pythonhacker69 4y ago
Governments are staring over the banks shoulders all the time! See banking regulators, FDIC, OCC, etc.
dontlaugh 4y ago
In some countries, all or most banks are state owned. It can work.
seanhunter 4y ago
A useful thought experiment is to consider why things might exist in the first place. Credit serves lots of useful functions in the economy, and has done since ancient times[1]. Consider someone (say a farmer) who needs to make investments (seed, fertilizer, equipment etc) that will pay off in the future (when the crop is harvested and sold). It would be very much harder for them to run their business if they could not borrow, or forward sell their produce (which is an agreement that requires credit as a basis). Or consider a merchant who needs to import or export goods. While the ship is at sea, either the buyer or seller almost certainly requires credit. Think about very large assets (eg houses). Most people who buy property require a loan. To buy a house for cash where I live would require a literal lifetime of saving - where would you live in the meantime? You would need to rent. How would your landlord be able to buy a property if they could not borrow? If you did eliminate borrowing to purchase property literally only the ultra-rich would own property and they would own all the property. This would enforce an extreme unfairness that would be self-perpetuating as it would be practically impossible to transition from the renting to the owning class. This is similar to Europe in the early medieval period when hereditary landed gentry owned all the property and as a result the vast majority of people lived lives of abject poverty. In general if credit did not exist, economic activity as a whole would be severely curtailed. Do people use or extend credit unwisely? of course they do. Should it be done away with? Probably not, or not without understanding the profound implications this would have across the economy. [1] https://erenow.net/ancient/money-in-classical-antiquity/6.php https://erenow.net/ancient/money-in-classical-antiquity/6.ph...
jrumbut 4y ago
I've always thought the US Post Office model was one worth exploring for more industries (retail banking, stuff like epipens and insulin, etc). If your lean and nimble business can outcompete the sclerotic and wasteful government, go ahead. No one will be happier than the public and the tax man. If not, then people will get their services from the public option.
- dragonwriter 4y ago
  In the USPS (also true of the US Post Office, but that hasn’t existed for quite some time) model, the government enterprise has an enforced legal monopoly, it is not in free and open competition wih private actors.
  - angus-prune 4y ago
    Im not american, so might be missing some context, but what is the monopoly? You can use Fedex, UPS etc to ship anything from anywhere to anywhere. Nothing is stopping you from using fedex to ship your christmas cards as well. I assume people stick with USPS for simple letters because its cheaper and easier, not because of any enforced monopoly.
    - jrumbut 4y ago
      This is the sense that I meant it in, obviously they are peculiarities in the 18th century institution of the postal service that may or may not be worth copying over.
      - dragonwriter 4y ago
        > obviously they are peculiarities in the 18th century institution of the postal service The USPS was created in 1971, which is not the 18th Century. (Heck, even the monopoly rules that originally applied to the Post Office that now apply to the Postal Service were first established in the 19th, not 18th, century.)
    - dragonwriter 4y ago

by morjom 4y ago

cdot2 4y ago

Most people would never be able to buy a house without credit. Along with many other reasons why credit is necessary.

notch898b 4y ago
I'm not saying there is anything wrong with credit but the ol latin american method of buying a house one brick at a time does work. You may have to buy the land all at once, but even where I live (top 10 city) that's doable for roughly what a down payment costs.
wildrhythms 4y ago
The concept of 'buy a house' is predicated on many other systems that make credit 'necessary'. Why do you think a person needs to 'buy a house' at all?
- dns_snek 4y ago
  > Why do you think a person needs to 'buy a house' at all? Because people need a place to live, it would be helpful if you stated which alternatives you have in mind? Renting for the rest of your life? Building a house, paycheck to paycheck? Something more radical, like abolishing private housing and give every citizen a place to live, for free?

pythonhacker69 4y ago

Governments are staring over the banks shoulders all the time! See banking regulators, FDIC, OCC, etc.

dontlaugh 4y ago

In some countries, all or most banks are state owned. It can work.

seanhunter 4y ago

A useful thought experiment is to consider why things might exist in the first place. Credit serves lots of useful functions in the economy, and has done since ancient times[1]. Consider someone (say a farmer) who needs to make investments (seed, fertilizer, equipment etc) that will pay off in the future (when the crop is harvested and sold). It would be very much harder for them to run their business if they could not borrow, or forward sell their produce (which is an agreement that requires credit as a basis). Or consider a merchant who needs to import or export goods. While the ship is at sea, either the buyer or seller almost certainly requires credit. Think about very large assets (eg houses). Most people who buy property require a loan. To buy a house for cash where I live would require a literal lifetime of saving - where would you live in the meantime? You would need to rent. How would your landlord be able to buy a property if they could not borrow? If you did eliminate borrowing to purchase property literally only the ultra-rich would own property and they would own all the property. This would enforce an extreme unfairness that would be self-perpetuating as it would be practically impossible to transition from the renting to the owning class. This is similar to Europe in the early medieval period when hereditary landed gentry owned all the property and as a result the vast majority of people lived lives of abject poverty. In general if credit did not exist, economic activity as a whole would be severely curtailed. Do people use or extend credit unwisely? of course they do. Should it be done away with? Probably not, or not without understanding the profound implications this would have across the economy. [1] https://erenow.net/ancient/money-in-classical-antiquity/6.php https://erenow.net/ancient/money-in-classical-antiquity/6.ph...

jrumbut 4y ago

I've always thought the US Post Office model was one worth exploring for more industries (retail banking, stuff like epipens and insulin, etc). If your lean and nimble business can outcompete the sclerotic and wasteful government, go ahead. No one will be happier than the public and the tax man. If not, then people will get their services from the public option.

dragonwriter 4y ago
In the USPS (also true of the US Post Office, but that hasn’t existed for quite some time) model, the government enterprise has an enforced legal monopoly, it is not in free and open competition wih private actors.
- angus-prune 4y ago
  Im not american, so might be missing some context, but what is the monopoly? You can use Fedex, UPS etc to ship anything from anywhere to anywhere. Nothing is stopping you from using fedex to ship your christmas cards as well. I assume people stick with USPS for simple letters because its cheaper and easier, not because of any enforced monopoly.
  - jrumbut 4y ago
    This is the sense that I meant it in, obviously they are peculiarities in the 18th century institution of the postal service that may or may not be worth copying over.
    - dragonwriter 4y ago
      > obviously they are peculiarities in the 18th century institution of the postal service The USPS was created in 1971, which is not the 18th Century. (Heck, even the monopoly rules that originally applied to the Post Office that now apply to the Postal Service were first established in the 19th, not 18th, century.)
  - dragonwriter 4y ago