While government continues to borrow and spend with reckless abandon, CNNMoney.com reports eight million Americans have cut up their credit cards.
TransUnion says 78 million people now aren’t carrying plastic. I don’t think I know any of these people, but good for them. A few of these folks want a card (or ten) but the card companies won’t cooperate. But more and more people are kicking the credit habit which is unprecedented according to Credit.com’s Gerri Detweiler.
She says. “When [people are] scared or nervous about their own economic situation, or the economy in general, then they’re more likely to buckle down and avoid debt altogether.” Like maybe when they’re unemployed and have been for 99 weeks or so. The consensus among number crunchers was that 150,000 jobs were added last month, but it turned out it was only 39,000. And, that’s if you believe the Labor Department numbers. John Williams’ unemployment rate at shadowstats.com is 22.6% (as opposed to the headline 9.8% number). What’s more interesting is Williams points out that payroll employment is below that of a decade ago, even though the population is 10 percent greater.
But who cares how many people are unemployed? After all, Paul Wiseman writing for the Associated Press claims, “Unemployment benefits help drive the economy because the jobless tend to spend every dollar they get, pumping cash into businesses.” He writes that analysts are worried that if the long-term unemployed are cut off from Uncle Sam’s money, the fragile recovery will get squeezed.
It hard to imagine that anyone could believe that taking money from one group of people and giving it to another spurs economic growth. Where would he get such a crazy idea in his head? It turns out from the Congressional Budget Office in Washington D.C..
The CBO says every $1 spent on unemployment benefits generates up to $1.90 in economic growth. The Labor Department estimates the unemployment bang for the buck is even greater at $2 for every $1 paid out. However, wealth is created by the accumulation of capital and capital is generated by saving not consuming. The notion that growth and prosperity come from consumption that is perpetuated by the eggheads at the CBO and Labor Department is complete nonsense.
But working economists tout the notion, with Mark Zandi of Moody’s Analytics and Diane Swonk of Mesirow Financial calling for renewing emergency unemployment benefits when the November Labor Department numbers disappointed.
Meanwhile, Washington evidently isn’t nervous enough to cut up its credit card. President Obama’s deficit commission called it a day after only 11 of 18 members signed on to the group’s feeble deficit reducing plan. The President commended the commission for “their important work in highlighting the magnitude of the challenge before us, and outlining an array of options to confront it.” (Yawn)
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I have a single credit card and only have it for the purposes of purchasing things online. A credit card is an excellent way to protect yourself because of the fairly easy dispute process (for me anyway) and barrier between your finances and the outside world. Needless to say, it never goes over $1,000 and is normally around $250 (auto-pay bills to save on stamps and time) and gets paid off immediately.
I have two cards that I am in the process of paying off. I am just going to get rid of them. After being unemployed for 3 months and not being terribly smart with money it gets really painful really quick.
But now I have a good job and I am never going to go into debt again. I spent most of my life without any credit cards or anything else, but I fell for the bullshit that goes along with the concept of a ‘credit score’ when I got my first house.
I am never going to fall for their lies again.
A credit card for protection on the internet is a very good thing, though. But it’s going to be harder and harder to find them that are not going to charge you a monthly fee if you don’t hold a balance.
Agreed,
A credit card is a useful way of making purchases, as long as you pay it off every month. In Canada, at least, there is no shortage of free credit card options; mine even has 1.5% cash back, free rental car insurance, etc.
If there is that much “growth” from people spending unemployment benefits then they should fire everyone except those working in retail and put them on the dole.
All kidding aside, remember that high unemployment and all of its resulting problems are a boon to the CBO and the entire government complex. Their job security arises from everyone else’s insecurity.
The CBO says every $1 spent on unemployment benefits generates up to $1.90 in economic growth. The Labor Department estimates the unemployment bang for the buck is even greater at $2 for every $1 paid out.
If this were true, then the stingy bastards really ought to be spending 8,000 kazillion dollars per minute on “unemployment benefits,” and thereby make the whole world abundantly rich.
Empirical Economic Data Cannot Conceal Economic Reality.
The empirical box is shrinking and squeezing every ounce of economic logic out of the brains of these economic nincompoops.
My suggestion is that they step outside, take a deep breath of fresh air, ponder the value of Ponzi schemes and counterfeiting, ponder if war is peace, and then go back inside to submit their resignation – in disgust of the fraudulence of Keynesianism.
The next step is to become a productive member of society and to shun the parasitic political class. This is the revolutionary spirit of ideological change – from statism to classical liberalism.
I’m proud to say that I canceled my one credit card years ago and I’ve never regretted it since. It’s a shame that so many Americans are caught up in the lie that you need credit to live (my in-laws fell into that trap years ago and now are so far buried in debt that they’ll never get out).
I can’t even begin to describe to you how wonderful it feels to live completely debt-free, the peace of mind that it brings, and the satisfation of being able to put away money in savings and having the knowledge that I’m accumulating real wealth.
Good on you… just beware the inflation faeries!!!
Who’s smarter than a fifth grader?
I have never had a credit card, partly because I didn’t trust the banks to have safeguards and test them to the point where they protected my money rather than just theirs (things like an Australian bank recently mislaying many people’s funds keep cropping up – and I’m now in Australia). Mainly, though, I spotted a tragedy of the commons mechanism in their fee structures, whereby all retail customers have to pay credit card operating fees via charges on merchants that the banks forbid them to discount for non-credit card customers, and I have a conscientious objection to that (recent Australian reforms now allow those discounts, but they aren’t yet made widely).
This article has some minor and major historical errors:-
No, blacksmiths did not do that. Whitesmiths work with tin, coppersmiths, silversmiths, and goldsmiths work with those metals – but blacksmiths work with iron. And no, that is not how “the business of minting coins came into being”; read on, below.
Actually, governments did just that, just into historical times (which is how we know they did). It was the early kings of Lydia in western Asia Minor who first did it, as we know from oral traditions that were soon written down, and from archaeological and numismatic evidence. Their first coins were tiny beads of electrum, a naturally occurring alloy of silver and gold, basically mini-ingots which were stamped with the king’s details to certify them. They rapidly evolved towards the format we are familiar with now, so that by Alexander the Great’s time they had all the modern features apart from raised, milled edges to allow stacking and hinder clipping (those may be mediaeval).
We also have historical records from colonialism that show that colonialists did introduce money in many areas, using coins that could be used to pay taxes to crowd out other forms of wealth storage like raw silver bracelets or herds of animals; those forms weren’t money since they weren’t used in ordinary trade.
Dr. Debt . . . Since 1996. DrDebt.com will keep you debt free.
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