Subject:
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Re: A hypothetical economics question...
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Newsgroups:
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lugnet.off-topic.debate
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Date:
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Wed, 27 Feb 2002 22:34:05 GMT
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Viewed:
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194 times
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Dave Schuler wrote:
>
> What would happen if all debts public and private were just plain
> cancelled as of, say, 1/1/2002? I choose an already-passed date so that
> there couldn't be a mad dash to accrue huge debt in hope that it would be
> eliminated. In all seroiusness, what would be the effects? Credit card
> companies, I suppose, would suffer mightily (though I've heard that the
> monthly point-of-purchase service charges are a greater revenue source than
> cardholder-finance-charges). Sallie, Fannie, and Ginnie Mae would likewise
> take quite a pinch of course. But after the dust settled, would we be
> better off or worse? I've read in unconfirmed sources that private consumer
> debt in the US approaches that Federal debt for sheer magnitude, but I can't
> confirm that figure.
I think it would cause economic collapse. One question you would have to
ask is what really do you mean by debt? If I buy stock in a company
which is trying to raise capital, is that a debt or not?
One serious problem is that you would probably lose most of your savings
since most of your savings is invested by your bank in loans.
This scheme would also tremendously benefit those who have high debt. I
would benefit to some extent since I currently have a credit card
balance and bought a new car a year ago. Someone who just bought a
house, even if their financial picture was currently worse than mine
would instantly be launched way ahead of me, and the person who just
took out a loan after whatever back dated cutoff date was chosen would
be really screwed.
Debt in and of itself is not a bad thing. What is bad is when the
interest any particular entity accumulates exceeds (or is even some
percentage) that entities income (over the long term, a short term
period where interest is higher than income is not necessarily bad).
Without debt and investment in it, it would be hard to pool capital in
order to do big things.
Frank
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Message has 1 Reply:
 | | Re: A hypothetical economics question...
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| (...) Gee, Frank -- don't you think its weird that I, a pagan, have generally come out in support of a custom enumerated in the bible; whereas you, a Xtian, have come out against it? Curiouser, and curiouser... (...) Didn't you mean: Wealth in and (...) (22 years ago, 27-Feb-02, to lugnet.off-topic.debate)
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Message is in Reply To:
| | A hypothetical economics question...
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| What would happen if all debts public and private were just plain cancelled as of, say, 1/1/2002? I choose an already-passed date so that there couldn't be a mad dash to accrue huge debt in hope that it would be eliminated. In all seroiusness, what (...) (22 years ago, 27-Feb-02, to lugnet.off-topic.debate)
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