A modest proposal: Ban credit cards...
What if they outlawed credit cards? Would the world end? Would it be financial Armageddon? Would we shuffle from food line to water queue in our now-tattered $250 blue jeans?
It's never gonna happen, we know. So play along with me here. I'm not talking about business credit. That's an altogether different animal (currently in hibernation). I'm talking consumer debt. This idea that we can have the McMansion AND the boat AND the trips AND the kitchen remodel because we could, up until just a bit ago, borrow all that money to do so.
And look where we are today.
What if we *had* to live within our means again? What if we couldn't buy whatever we wanted because we didn't have credit cards? Would it suck? Heck yeah. But only because we've gotten so used to having credit, and being able to buy those cute shoes or fund our student film or buy that iPhone because it's so cool and you just gotta have it.
In other words, what would happen if we couldn't have all that...stuff...unless we actually had the cash for it? We'd have to get used to saving again. Saving actual dollars (while they're still worth anything at all, I mean). What if you had to do the now unimaginable and save a 20% cash downpayment before buying a new house? Wouldn't that kind of thinking actually help our economy down the road? A nation of savers is a good thing, isn't it?
We wouldn't be so in debt. We wouldn't have so much superfluous stuff. We might work less and live more. Thrift might come back into style.
Being truly forced to live within our means would really foul up our carefully-crafted consumer society, true. But as I'm told, many generations of people have managed to do so. My dad tells me that in the '60s you went to the bank on a Friday with your paycheck, and took out enough cash to get through until the next week. If you ran out...well...tough luck.
So set me straight please. Why couldn't we just ban credit cards forever? It's just a thought, given today's financial meltdown...caused by the credit crisis.