Today, 03:23 AM
Can Devil21 or anyone explain this with concrete examples? I'm a rookie, but this is what I observe.
Banks pushed easy credit several decades ago through credit cards, student loans, etc. Banks don't have actual money to back up most of it; however, nobody has savings, so there is no danger of bank runs. Interest is incredibly high and collected from a good number of debtors. Defaults are written off by banks through their writing banking laws/regulations. So, banks clean up on 30% interest and break even on defaulters. Net gain.
The above coincided with cheap global products (e.g., Chinese junk) several decades ago. People paid less, but the value was even lesser. Net consumer loss. Products and services continue to decline, so consumers get less value with each passing year. Those consumers are availed easy credit, which is a losing proposition for their junk of diminishing value. The American consumer therefore, is enslaved to a modern day variation of company scrip.
All of this suggests deflation. I mean that in a broader sense. Products and services are crap and getting worse. Food is pretty cheap (e.g., fast food), so people fatten up and contribute to the their own spiraling company scrip enslavement and misery. Bankers will like to eliminate actual money and completely replace it with credit, which would be akin to company scrip vouchers.
This might be naive, but this is what I observe. Am I thinking small potatoes with consumer examples? Is it much bigger than I think? Or, does it all add up? Would it not benefit the Mr. Potters of the world to keep things "deflationary" and Johnny Punchclock tearing out his hair living from check to check? Aren't they cleaning up already in Pottersville USA? Would they favor Donny's protectionist proposals? Or does that even matter?