Credit is bad because it discriminate: if you are poor you don't get any if you are richer you get some with high interest rate if you are even richer you get a lot without interest rate at all.
Most of the questions you are asking I deal with at
Innovative Credit Free, Free Market, Economic Ideology
Of course I stand ready to discuss each point and improve the model if possible.
Credit does not discriminate.
It is not given based on how much money you *earn*
Trust me - I've been dirt poor and still was able to sign up for credit cards, buy a truck, and buy a house.
What goes UP is your INTEREST that you pay *because* of your *credit history* - it has nothing to do with how much money you actually earn.
Now - it *should* - a bank *should* watch out for it's bottom line. IF they had done so then we wouldn't be IN this housing market and otherwise economic crunches (not all of it - but some areas are purely in shambles because of credit *not* being very discriminatory) . . . so our problems is caused by the exact opposite of how you believe the credit-industry works.
First there is that common mistake that analysis the economic failure as the result of bad moral behavior and create guilt. That is wrong. The problem is not that you got into too much debt it is that you got into it without knowing that your income in the future will not be sufficient to reimburse that debt.
So here you're actually contradicting your theory that you're presenting.
In your theory it's supported that credit is overall purely a bad thing and must be done away with.
But in this quote you're saying that your debt (from taking credit) isn't *bad* - it's that people's future pay was lost that made their *too much debt* bad.
Which is it - credit, overall, is bad?
Or that debt - overall - is bad because people ended up losing their jobs?
And they lost their jobs because?
What is your theory going to do to give them other jobs and fix this hole in the job-market? Absolutely nothing.
You make it feel like credit is given to the good people and not given to the bad people. Credit is given to the rich and not given to the poor. To equate rich and good and poor and bad is your choice not mine. At one point you won't be able to pay back your credit, may be it will change your point of view about what is good or bad,
Credit is given to everyone.
Interest is calculated based on risk - which comes from credit *history*
The only people who are fortunate enough to miss out are the people who *have no credit* and that has nothing to do with *income* - You can be filthy rich and still have NO or horribly LOW credit.
Why do you think that all rich people have good credit?
Why do you think that all poor people have bad credit?
I'm a living example of the opposite:
I was poor - had *no* credit - and when I did get a loan for my truck and house I still had *really bad credit* and I was still officially *poor* - so my loan came with a whopping 13% interest rate.
But - I started to *care* and *manage my money* and I was then paying bills *on time* for quite some time.
Then my credit score improved *because* was in more control of my money - in fact, it was quite stellar for some time (well over 730) - but I was still officially *poor*
See- my improved credit was based on my credit-history and *not* my income.
When my credit improved - because I was paying my bills on time - I was then able to re-finance my truck for a much lower interest rate.
Now we're far better off - money wise (we're not officially rich but we're definitely not classified as poor anymore) - but our credit is back in the doghouse *because* we got back into horrible spending/bill paying habits (paying bills late - or not at all - because over-spending on crap we didn't need to have took all of our money)
VO77:
Your views are being drawn from a lack of knowledge of the system, why it was formed, the purpose it serves, and why it is useful.
You need to educate yourself more on the subject before you decide whether it's bad or good.