

Usury and the collapse of empires - chl
http://lemire.me/blog/archives/2011/08/09/usury-and-the-collapse-of-empires/

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yaks_hairbrush
"But can anyone convince me that credit card companies produce wealth by
charging exorbitant interests to people who use the money to buy beer and
chips?"

How using my credit card to buy beer and chips produces wealth:

1) My rewards program immediately reduces the price by 1%.

2) If the chips are moldy and the vendor won't let me return them, I can
cancel the payment.

3) I pay no interest. The credit card bill is paid in full every month.

~~~
billybob
He's not talking about you, then.

<quote>Economists who expect people to be rational won’t believe in usury.
Surely, people borrow money to be better off. Yet the average credit card debt
per household is over $15,000 in the USA (and it grows all the time, of
course). Does anyone believe that these $15,000 are invested in highly
profitable ventures? (They would need to be highly profitable since credit
cards often charge over 15% for loans.)</quote>

~~~
hugh3
I take issue with that $15,000 number. According to:

<http://www.indexcreditcards.com/creditcarddebt/>

revolving consumer debt (of which credit card debt is a large but strict
subset) was only $7400 per household in November 2010 and I doubt it's doubled
since then.

Indeed, <http://www.federalreserve.gov/releases/g19/Current/> suggests it has
gone down somewhat since then.

Still crazy high, of course. I can imagine how an emergency situation _might_
cause someone to have to spend more money on a credit card than they have in
their savings account. I can't imagine how the _average_ person manages to get
into that situation, though.

~~~
jmaygarden
I worked at a credit counseling service in high school (circa 1995), and
numbers in that range would not surprise me at all. This is a navy town, and I
couldn't count the number of young enlisted sailors that would come in with
wife, kids and over $50k in unsecured credit card debt. Also, it mostly wasn't
on normal credit cards. They would typically have a card for a dozen or more
different retailers (e.g. Sears, Express, Limited, Target, etc.) all maxed
out.

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CWuestefeld
_Yet the average credit card debt per household is over $15,000 in the USA
(and it grows all the time, of course). Does anyone believe that these $15,000
are invested in highly profitable ventures?_

Who is the author to ignore the values and priorities of the rest of the
public? It seems that he wants everyone to live by his own standards.

If the people borrowing this money believe that they're getting greater value
than they are costing themselves, then they are in fact making themselves
better off.

The author doesn't see that they're better off, either because he doesn't
understand their values, or he's simply not looking at them as individual
people but a monolothic heap of people. But either way, he's ignoring the
evidence of their own actions.

~~~
raganwald
While there may be merit in the idea that consumer debt makes people happier
or even is in their best interests, I’m not sure that “the evidence of their
own actions” is sufficient to persuade me. Not far from where I live I can
find people selling themselves to starngers for crack money. I observe people
smoking cigarettes.

People do things that are I believe are harmful to their own interests, and I
stop short of embarcing an amorality where aiding and abetting them for my own
gain is right since they have free will and make their own choices.

The do believe they are better off. I think I understand their values. I do
not ignore their priorities. But that doesn’t mean I always agree with them.
Crack addicts and smokers, that is. I don’t have as rigid a belief about
credit card debt, I’m just pointing out that “Evidence of their own actions,
values, and priorities” does not persuade me in and of itself.

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chico_dusty
Great, another gold bug.

