Is credit good or bad for the economy?
I was wondering with the economy so bad... Is credit good or bad??
Public Comments
- Credit is good since it provides an incentive for spending
- Credit is very helpful if what you're using it for produces an economic return greater than the cost of the credit. It's very bad if the return is less than the cost of the credit.
- Credit is good as long as we use it within the limitation, if there is such thing. If we rely on credit for spending, which we have done for the past several decades, there will never be an ending of the cycle, but there will be chaos. People and companies are in heavy debt, and once they reach the peak of debt' Everest, they simply drop to the bottom which takes a heavy toll in our economy. Even in a barter system, credit can run out of control. We call ourselves capitalist nation, but we clearly don't understand how capital works. If there is a clear limit, then credit is a good thing. However, with constant pressure to grow, we simply forget to put any limitation. What we are seeing now is that we ran out of credit as big, big chunks of securities disappeared overnight. Since then we continue to spend on top, and mid and bottom tiers are reluctant or simply can't find any credit to spend. Seems like we have got into a credit world and can't seem to get out. Sure seems bad, but credit is unavoidable.
- Credit is a little bit okay as long as the interest rates on said credit is kept at true market rates. Meaning not at the artificially low rates set by the Federal Reserve Bank which encourages malinvestment the effects of which we are seeing now. Personally I don't like credit. I don't use credit, I buy everything cash. I would hope that we could get back to a time where people would save the money to buy a car or whatever rather than borrowing it.
