> [Lindsey Johnson] added, “By normalizing being late on credit card payments, the administration is knowingly putting consumers’ financial health at risk.”
It's interesting that they are not at all concerned about the interest on credit card balance putting consumer' financial health at risk. For consumers at risk, the interest charge is far larger than the late fee itself anyway, which means the late fee is just gravy on top.
A more cynical view would be that the government is backed into an economic corner and need an ever growing level of consumer debt to prop up the markets and/or currency.
Well our monetary system is based on a few assumptions that are important here.
One is that a "healthy" level of inflation at 2-3% per year is needed.
Another is that our money supply is based on debt, meaning that growing the money supply (the original definition of inflation) requires new debt to be created faster them existing debt is paid off.
We can't have 2-3% inflation without creating more debt. Consumer debt is one of the forms of debt that creates new money, so I think its safe to assume we need that debt to be growing at a similar pace to keep up. If consumer debt disappeared entirely we would still need other forms of debt to pick up the slack, meaning on average we would still have the same level of debt per person to keep the system afloat.
Its not quite that simple unfortunately. Inflation can't be measured or controlled in such accurate detail that we can keep them pegged without any "real" growth. Debt will need to increase faster than inflation to keep a level of buffer in the system.
The monetary system itself does actually depend on inflation. Inflation creates an incentive to spend and invest your money, and without both our system of money would collapse.
Fiat currency and fractional reserve banking mean that the money requires flow through the system. The velocity of money is a bit of a controversial measure, though personally I don't understand why. Ignoring the specific measure though, our money must have velocity at some level and the system would collapse if velocity fell too low or increased too high.
> Debt will need to increase faster than inflation to keep a level of buffer in the system.
Creating a buffer only needs to happen once. So if debt increased faster than inflation 30 years ago, and then on average kept pace since then, we'd still have the buffer. That kind of buffer is sustainable.
I think that still assumes that we can reliably and accurately keep inflation and debt on the same page. If I were in charge of something similar I'd absolutely want to see a small but steady increase in debt vs inflation just to be sure, entire economies aren't easy ships to right when things go wrong
Why is that cynical? One of first things POTUS Bush #2 said in the wake of 9-11 was (effectively), "Keep shopping."
It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead.
What that poster outlined was not being "backed into an economic corner". Rather it is how our system is built. If everyone stopped spending and started saving we'd be in a world of hurt.
I'll even go a step further and say that the entire world would get into trouble if consumer spending stops in the lead economies. So don't get me wrong, it doesn't have to be the US that provides the spend-y consumers, but somebody has to provide them.
At a personal level, collecting IOUs works fine as a way to defer consumption (ie, you can save for retirement by putting money in a bank account or gold bars under your bed or whatever).
At a whole-of-society level, that doesn't really work and "saving" had to take the form of warehouses full of stuff.
I say its cynical mainly because in this context it was an alternative reason based on a distrust of the system and an assumption that there are ulterior motives.
I do actually think the cynical explanation is more likely, but the government isn't going to tell is they're limiting late fees to make sure we keep racking up more consumer debt.
I don't see the need for any *assumption* about ulterior motives. The motives are clear, and certainly not ulterior. All I had to do is pull my head out of the sand, keep looking around, and take notes.
Well I appreciate that. I consider it an assumption of ulterior motives only because its sold as a consumer protection play. Basically, they're claiming specific motivations and I think there are unspoken motivations driving it instead.
Definitely mincing semantics here though, and probably giving too much leeway to those making these regulations.
> It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead.
Any social contract operates on that principle.
Government only exists because most people believe in its legitimacy. Law only works because most people follow most of it. Property rights only exist because most people respect them most of the time. Contracts only work because most signatories follow them most of the time.
It's weird how fiat money is the one thing that gets singled out, here, when all the social agreements that actually make our society work are also artificial.
When a financial tradition (i.e., money) carelessly morphs into being a "social contract" red flags should be flying. Instead, we close our eyes and pray?
Money has always been a social contract. Just because it's a "financial tradition" doesn't change that. Shiny metals are no more valuable to hungry people than numbers in a database. The myth of King Midas shows this is nothing new.
Noah. That's simply not true. Lyn Alden's "Broken Money" does a couple+ chapters on the history of money. "Cross cultural" transactions are essentially. You can't have a "social contract" across sometimes conflicting cultures. Long to short, this is why we eventually ended up using gold.
You absolutely can have a social contract across conflicting cultures. You just gave an example: commerce valuing gold is a social agreement. Another example is countries at war each other following the rules of war (not always, but even one instance makes your claim false).
What would a money look like without any social contract? How would we even enforce the basic principles of fungibility, durability, etc?
All money is a social contract as far as I can tell. They're always based on the expectation that we as a society will continue to value an intermediary at a predictable price relative to things we may want yo buy or sell later.
I'm not sure what would make some money "real", is that the same concept as hard money?
Bitcoin isn't real money and no one actually tries to use it as money today. At best its a security, though realistically its more of a gambling chip than anything else.
Bitcoin fundamentally won't work as money, even if it can be a store of value. Second tier networks like lightning are required, but those only work by abandoning core pieces of the bitcoin protocol and avoiding actually using bitcoin at all.
Can we just do something about taxes? People would be able to pay for stuff if the government didn't steal so much of their money.
After the recent few years of inflation middle class is now subject to higher tax brackets than ever, and poverty class is being taxed at almost 30% if you include some states' state tax.
Then there are property taxes which should be abolished, or else landlords just pass them onto renters, which means poverty class now pays the taxes of the rich.
> After the recent few years of inflation middle class is now subject to higher tax brackets than ever, and poverty class is being taxed at almost 30% if you include some states' state tax.
Under the 2023 tax codes, a single filer in California would have to have an household income of $118,250 in order to see a 30% effective tax rate across federal and state taxes combined. I understand $118k might not go as far as it used to (depending on the specific location), but that's hardly the "poverty class". Under the same conditions, a $50,000 income would see an 18.84% effective rate.
I don't disagree with the premise that taxes, both federally and at state levels, could be more progressive than they already are, ceteris paribus. Property and sales taxes are broken in this regard, and the obscenely wealthy have too many pathways to avoid contributing meaningfully to the nation's collective tax burden.
$118k is close to poverty class in the bay area if you have a family.
For someone fresh out of college who can live in half a bedroom in a moldy group house, bike everywhere, and never see a doctor even in emergency, it's barely okay, but that income isn't sustainable.
Median income is $175k in SF and $181k in SJ, by the way.
Weird that “the wealthy abuse the poor” is literally part of your complaint but you’re not focusing on them and instead the only group that could potentially rectify that without violent revolution.(please note: “could” is doing a lot of work in the previous sentence and I understand that many of those in government are there to ensure the right for the wealthy to continue this abuse).
Do you believe landlords would lower rents tomorrow if their tax was lower absent any other force incentivizing them to pass that profit back? I’m pretty sure there was a post on here a few days ago about how current rent pricing software used by many many people may be violating price fixing laws.
Do you think that without regulation banks would be better? That somehow the process of reigning in their avarice is causing it? When has that ever historically been true, as almost any era or un/deregulation coincides with massive wealth disparity.
Is it? The government wants to persist and history shows it/they will do what it can to do so.
Whether that's direct taxes or other means of financial manipulation (e.g., printing more money), govs do whatever it takes to avoid chaos and persist.
And the gov runs deficits and prints money (read: indirectly taxing) to avoid the chaos of raising taxes. We're paying but in ways that are less transparent.
It's interesting that they are not at all concerned about the interest on credit card balance putting consumer' financial health at risk. For consumers at risk, the interest charge is far larger than the late fee itself anyway, which means the late fee is just gravy on top.