09-11-2016, 01:21 PM
Interest rates are high on consumer loans, and lenders push consumer borrowing because such is extremely profitable. A bank that gets practically free money from the Fed and lends at 20% for a credit card has a hugely-profitable client.
I am tempted to believe that while we are stuck with every possible effort to extend 3T practices (heavy consumer spending with the aid of subprime lending) as long as Big Business can get away with it, we will find ourselves soon enough with the sort of economy that we associated with the 1950s -- largely pay-as-you-go consumerism that puts more emphasis on goods and services than on lending.
It will not be a matter of choosing for merchants; it will be necessary for political and social stability. As a general rule, creditors are generally on the Right side of the political spectrum, and to the extent that they have control of people through debt they are reactionary. Remember: the slaved owed his mater everything. Debtors tend to be on the Left, seeking a more vibrant economy and perhaps inflation to discharge or trivialize debt. People in hock up to their eyeballs have cause for seeking revolutionary change because they have little choice (especially if they have low incomes) for any tangible improvements in their lives.
Small-scale creditors, people who might own a bank account, some government bonds, a life-insurance policy, and maybe a hundred shares of stock, have a stake in the capitalist system... but also in its vibrancy. They don't want things to get so bad that they must sell those off for survival. Those were the people who had buttons that read I LIKE IKE. Conservative, yes -- but not fascistic.
Today there are few small savers. Life-insurance policies are relics. People are more likely to be in debt for $8000 in consumer spending (and I do not mean a new car or household improvements for which one has a tangible asset) than $8000 in stock or bonds.
The placidity of the post-Crisis High of the "I LIKE IKE" era resulted in no small cause from people having assets instead of being heavily in debt. Barack Obama might be fairly similar in competence, temperament, and ability to Eisenhower; he is probably about as good as Ike. But neither Kennedy nor Nixon, either of which could easily have been seen as the successor of Eisenhower at this time 56 years ago, was a reckless demagogue exploiting mas distress. Healthy political orders have no room for a demagogue as crass as Donald Trump. A nation of scared debtors creates such room.
I am tempted to believe that while we are stuck with every possible effort to extend 3T practices (heavy consumer spending with the aid of subprime lending) as long as Big Business can get away with it, we will find ourselves soon enough with the sort of economy that we associated with the 1950s -- largely pay-as-you-go consumerism that puts more emphasis on goods and services than on lending.
It will not be a matter of choosing for merchants; it will be necessary for political and social stability. As a general rule, creditors are generally on the Right side of the political spectrum, and to the extent that they have control of people through debt they are reactionary. Remember: the slaved owed his mater everything. Debtors tend to be on the Left, seeking a more vibrant economy and perhaps inflation to discharge or trivialize debt. People in hock up to their eyeballs have cause for seeking revolutionary change because they have little choice (especially if they have low incomes) for any tangible improvements in their lives.
Small-scale creditors, people who might own a bank account, some government bonds, a life-insurance policy, and maybe a hundred shares of stock, have a stake in the capitalist system... but also in its vibrancy. They don't want things to get so bad that they must sell those off for survival. Those were the people who had buttons that read I LIKE IKE. Conservative, yes -- but not fascistic.
Today there are few small savers. Life-insurance policies are relics. People are more likely to be in debt for $8000 in consumer spending (and I do not mean a new car or household improvements for which one has a tangible asset) than $8000 in stock or bonds.
The placidity of the post-Crisis High of the "I LIKE IKE" era resulted in no small cause from people having assets instead of being heavily in debt. Barack Obama might be fairly similar in competence, temperament, and ability to Eisenhower; he is probably about as good as Ike. But neither Kennedy nor Nixon, either of which could easily have been seen as the successor of Eisenhower at this time 56 years ago, was a reckless demagogue exploiting mas distress. Healthy political orders have no room for a demagogue as crass as Donald Trump. A nation of scared debtors creates such room.
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.