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Comment by anigbrowl | Hacker News Reader

Creditors can experience some of the pain that they normally inflict on others. They are not sacrosanct and are the least important parties in economic relations during an emergency. As normality is restored, they will have new opportunities during the ensuing large scale financial restructuring.

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The thing is that a lot of creditors (suppliers basically) are just other businesses. It’s not all bankers holding onto a bunch of debt obligations

Probably ironically banks will be able to make even more money as people pull into credit lines to go over this hump

Bob’s Drywall Supply has net 60 for a delivery of drywall.

Constructor Bill now can’t pay. Bob’s Drywall is a creditor and is on the hook for a product he already shipped. Now Bob’s Drywall Supply can’t pay the company that provided him with Net 90 terms.

So Bob and Bill are now insolvent. And they fire their employees.

Suggesting that creditors somehow deserve “pain,” is just cruel. Creditors don’t “inflict pain” on people — they provide capital to people with a reasonable expectation of getting paid back. Of course I don’t care much about the Payday Lender/predatory lenders so much, but suggesting that creditors deserve some sort of payback is ridiculous. The vast majority of businesses rely on credit, without credit, you would have an economic collapse. And they aren’t the “least important” parties — they are the most important because they’re the ones providing the capital for businesses to operate.

The problem is when everybody takes a hit except the "too big to fail" banks. That's what happened in the last financial crisis, the government bailed out only the big banks by buying their toxic loans at face value. When Obama tried to also bail out individual homeowners it sparked the Tea Party backlash and he pretty much backed off on those plans.

You're twisting history. The tea party backlash was to the bailing out of banks.

You misremember. [1] has the video on CNBC that started the Tea Party.

“Yesterday Rick Santelli, who reports from the floor of the Chicago Board of Trade the for CNBC, unleashed a rant against Obama’s newly announced housing bailout plan, intended to help some homeowners refinance mortgages and avoid foreclosure.”

1: https://opinionator.blogs.nytimes.com/2009/02/20/rick-santel...

The spark for the Tea Party was a viral rant by CNBC's Rick Santelli against a program to help individuals avoid foreclosure. Look it up.

Their main issue was being pro-austerity. Most of what they focused on was cutting funding for Social Security, Medicare, Medicaid, and other social services. They wanted a smaller government at all costs (though curiously they never called for reducing military spending).

Occupy Wall Street, on the other hand, was the group that was specifically against bailing out the banks. The Tea Party was more about not helping regular people.

I thought it was obvious I was talking about financial institutions, which are just going to have to eat it for a while, although with interest rates now at 0% that will be more manageable. I can't address every aspect of the economy in a short comment.

I thought it was obvious I was talking about financial institutions

It's not obvious at all.

The comment you were replying to said "can't pay the booze suppliers" so it's pretty clear they we using the normal business definition of creditor.

As normality is restored, they will have new opportunities during the ensuing large scale financial restructuring.

Yes, creditors restructure payment schedules all the time.

The company, Construction Materials Inc, that supplied Bob's Drywall Supply should accept a delay in payment. In order to ensure payment comes as quickly as possible, an order block (no new orders are accepted from Bob's) or a shipping block (orders are accepted but not shipped) or both are placed on Bob's account.

Now, of course, what of Construction Materials, Inc? Surely they buy the raw materials from someone and ...so on. Everyone does - or should do - the same: don't adjust the terms, simply accept that the past due items are past due and will be paid a bit later than normal.

Eventually it will hit a bank or large financial institution, and they ought to do the same: accept the situation and wait. It's costly when businesses go bankrupt and everyone knows that this situation is affecting everyone else and will blow over in about six weeks.

At some point it hits Joe the employee and he can’t wait 6 months to get paid because he lives paycheck to paycheck and will starve by then. Overall you are right until it comes to individuals. A dry wall supplier can close its doors for six months and their products will t go bad. Joe the employee can’t just not eat for six months. If we do this systematically we would arrive at UBI. We would also need to delay all tax collection and so forth.

That's where 0% credit comes in. It needs to take the whole chain. We shut down for 3 months. Net 60 terms become net 150. Net 90 becomes net 180. Everyone pays as planned, just up to 6 months later and with no interest.

This could help, but note that it still puts a crimp in things, because entities that extend credit (in any form) are counting on previous debts being paid in order to offer money/goods to other customers.

This applies even to the banks at the top of the chain -- at least until you get to (in the U.S.) the Fed itself, which can will money into existence if needed.

Creditors absolutely inflict pain on people who do not pay. That the borrower agreed to the pain is hardly a moral high ground.

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