Debts or no debts

[Loppan Torkel]

What's least risky?

Is there any chance private debts will be erased as a general stimulus package? Could it be done? Why/why not?
Would you support such a cancellation of debt?

 

[kochman]

What's least risky?

Is there any chance private debts will be erased as a general stimulus package? Could it be done? Why/why not?
Would you support such a cancellation of debt?

Does it have to be all or nothing?

How about shooting for around neutral but it being ok to have some debt for a period, and yikes, a surplus at times?

 

[Murky]

Realistically, canceling all private debts is unlikely. There will probably be some attempts at fiance reforms but those will be met with intense lobbying efforts by the financiers. We might see some sort of stimulus that cancels some student loan debt and helps some people with their mortgages.

 

[rugbyLEAGUEfan]

I've no idea of the economic benefits but if I selfishly considered my circumstance I'd vote no. I don't have any so I'm assuming that I would be relatively worse off. Wouldn't this be extremely inflationary and thus devalue my savings?

 

[ace99]

Debt is a fictional concept. When enough people default that stuff is gone. There's a monstrous amount of student loan debt that aint never going to be repaid. That debt strangles economic activity.

 

[kochman]

Debt is a fictional concept. When enough people default that stuff is gone. There's a monstrous amount of student loan debt that aint never going to be repaid. That debt strangles economic activity.

This is one of the dumber things I've seen on the internet.
You know what happens when enough people default?
The haves stop loaning to the have nots and the economy stops, businesses that take out loans to meet payroll obligations between jobs go under, etc.

 

[ace99]

Inevitably there will be a nationalization of the banks once the student loan bubble bursts. (And its going to burst big)

 

[kochman]

Inevitably there will be a nationalization of the banks once the student loan bubble bursts. (And its going to burst big)

It'll be the same as the housing bubble... banks (aka, the haves) will stop loaning until the gubbamint gives them all sorts of money. We saw this happen already, no reason to suggest anything else will happen.

Doesn't take much of a default rate before the banks start pulling the purse strings tighter either.

 

[ace99]

We'll see.

 

[Patroklos]

Inevitably there will be a nationalization of the banks once the student loan bubble bursts. (And its going to burst big)

It doesn't matter who owns the bank, once they start giving out money again you have private debt again.

 

[Loppan Torkel]

If all Swedes put all their loans in one bank, their savings in another and let the first bank go bankrupt with no government bailout, we'd all be rich.

 

[Leoreth]

Does it have to be all or nothing?

How about shooting for around neutral but it being ok to have some debt for a period, and yikes, a surplus at times?

The opposite of surplus is not debt, but deficit. Two different things that are confused all of the time.

 

[ArneHD]

If all Swedes put all their loans in one bank, their savings in another and let the first bank go bankrupt with no government bailout, we'd all be rich.

Wait, how does the first bank get money to loan out in the first place?

 

[really]

This is something that comes up here in Ireland frequently - it is usually brought up by those who are wallowing in property related debt.

They seem to think that debt can be magicked away while they hang on to the property and that this can be done without wiping out savers or lumbering the state with further bank bailouts.

As someone with savings and no debts who already pays a lot of taxes - I don't like the idea.

If you want your debts wiped out- petition for bankruptcy, surrender all your assets and expect to never get a loan again.

Edit: That or start paying it back...

 

[kochman]

The opposite of surplus is not debt, but deficit. Two different things that are confused all of the time.

I'm aware... Deficit is a yearly shortcoming, debt is overall amount owed.
Running a surplus is a yearly addition, and I should have used having some savings is the overall amount on hand and not being spent...

 

[Leoreth]

Yeah, I assumed you knew, I was just using your quote as a jumping off point. Because many people really don't know the difference and that bothers me.

 

[Loppan Torkel]

Wait, how does the first bank get money to loan out in the first place?

Is that an issue for banks today?

 

[Patroklos]

It is if you intend to make one bank for savings unable to lend and another for lending unable to take deposits, which was your suggestion.

 

[Loppan Torkel]

I never suggested they'd be unable to act as normal banks initially.
Even if it was meant mostly in jest - if you added a few banks and created a loan circle, why wouldn't this work? From what I've learned lately the banks can create large amounts of money from little money. If all withdrew their money from a few selected, sacrificial banks and put them in a few others, the former banks would crash and outside investors would be pissed, but we'd be rich for a little while. We should probably invest in gold or some foreign currency fairly quickly, if we went ahead with the plan...

 

[really]

If all started to withdraw their cash there wouldn't be enough left to cover the remaining withdrawals causing a bank run - those who withdrew their cash first would get it all, those who tried to withdraw later would lose out.

The odds are the outside investors you are trying to rob are also Swedish (pension funds, other banks as you mentioned, long term savers)