It's interesting that they are not at all concerned about the interest on credit card balance putting consumer' financial health at risk. For consumers at risk, the interest charge is far larger than the late fee itself anyway, which means the late fee is just gravy on top.
One is that a "healthy" level of inflation at 2-3% per year is needed.
Another is that our money supply is based on debt, meaning that growing the money supply (the original definition of inflation) requires new debt to be created faster them existing debt is paid off.
We can't have 2-3% inflation without creating more debt. Consumer debt is one of the forms of debt that creates new money, so I think its safe to assume we need that debt to be growing at a similar pace to keep up. If consumer debt disappeared entirely we would still need other forms of debt to pick up the slack, meaning on average we would still have the same level of debt per person to keep the system afloat.
And the monetary system doesn't depend on inflation per se, it's just that aiming for slight inflation is the easiest way to avoid deflation.
The monetary system itself does actually depend on inflation. Inflation creates an incentive to spend and invest your money, and without both our system of money would collapse.
Fiat currency and fractional reserve banking mean that the money requires flow through the system. The velocity of money is a bit of a controversial measure, though personally I don't understand why. Ignoring the specific measure though, our money must have velocity at some level and the system would collapse if velocity fell too low or increased too high.
Creating a buffer only needs to happen once. So if debt increased faster than inflation 30 years ago, and then on average kept pace since then, we'd still have the buffer. That kind of buffer is sustainable.
It's a fiat currency based system that persists simply on the belief that it's too big to stop (i.e., fail). Just keep your head stuff in the sand, keep pushing forward and pretend there's no cliff ahead.
What that poster outlined was not being "backed into an economic corner". Rather it is how our system is built. If everyone stopped spending and started saving we'd be in a world of hurt.
I'll even go a step further and say that the entire world would get into trouble if consumer spending stops in the lead economies. So don't get me wrong, it doesn't have to be the US that provides the spend-y consumers, but somebody has to provide them.
It can be China.
It can be Europe.
Whatever. But somebody has to spend.
At a whole-of-society level, that doesn't really work and "saving" had to take the form of warehouses full of stuff.
I do actually think the cynical explanation is more likely, but the government isn't going to tell is they're limiting late fees to make sure we keep racking up more consumer debt.
You're spot on. Don't belittle your insights.
Definitely mincing semantics here though, and probably giving too much leeway to those making these regulations.
Any social contract operates on that principle.
Government only exists because most people believe in its legitimacy. Law only works because most people follow most of it. Property rights only exist because most people respect them most of the time. Contracts only work because most signatories follow them most of the time.
It's weird how fiat money is the one thing that gets singled out, here, when all the social agreements that actually make our society work are also artificial.
All money is a social contract as far as I can tell. They're always based on the expectation that we as a society will continue to value an intermediary at a predictable price relative to things we may want yo buy or sell later.
Real money would likely look like gold, or perhaps Bitcoin.
Fiat money would be strictly social contract based, in a Bernie Madoff sorta way.
Bitcoin isn't real money and no one actually tries to use it as money today. At best its a security, though realistically its more of a gambling chip than anything else.
Bitcoin fundamentally won't work as money, even if it can be a store of value. Second tier networks like lightning are required, but those only work by abandoning core pieces of the bitcoin protocol and avoiding actually using bitcoin at all.
Why would it look like bitcoin, and not any one of a trillion near-identical forks of bitcoin?
(Because there's an social contract, that by fiat decides which one is the 'real' one, just like how vkoubux aren't considered legal tender.)
After the recent few years of inflation middle class is now subject to higher tax brackets than ever, and poverty class is being taxed at almost 30% if you include some states' state tax.
Then there are property taxes which should be abolished, or else landlords just pass them onto renters, which means poverty class now pays the taxes of the rich.
Under the 2023 tax codes, a single filer in California would have to have an household income of $118,250 in order to see a 30% effective tax rate across federal and state taxes combined. I understand $118k might not go as far as it used to (depending on the specific location), but that's hardly the "poverty class". Under the same conditions, a $50,000 income would see an 18.84% effective rate.
Both calculations assume the standard deduction is used; common tax credits and deductions would bring the effective rate lower. These were calculated using: https://smartasset.com/taxes/california-tax-calculator
I don't disagree with the premise that taxes, both federally and at state levels, could be more progressive than they already are, ceteris paribus. Property and sales taxes are broken in this regard, and the obscenely wealthy have too many pathways to avoid contributing meaningfully to the nation's collective tax burden.
And counting only individual FICA taxes is really just an accounting trick.
Merely accounting for employer FICA “contributions”, and $70K in California gets you to a 30% marginal rate.
For someone fresh out of college who can live in half a bedroom in a moldy group house, bike everywhere, and never see a doctor even in emergency, it's barely okay, but that income isn't sustainable.
Median income is $175k in SF and $181k in SJ, by the way.
Do you believe landlords would lower rents tomorrow if their tax was lower absent any other force incentivizing them to pass that profit back? I’m pretty sure there was a post on here a few days ago about how current rent pricing software used by many many people may be violating price fixing laws.
Do you think that without regulation banks would be better? That somehow the process of reigning in their avarice is causing it? When has that ever historically been true, as almost any era or un/deregulation coincides with massive wealth disparity.
Whether that's direct taxes or other means of financial manipulation (e.g., printing more money), govs do whatever it takes to avoid chaos and persist.