Assuming:

Your credit card balance is the average 8000 @16% @minimum payment(400),

Your first car costs 30,000(550), and

Your second car costs 20,000(370/M), and

Your home 350,000(1,400/M),

That means you pay 400 + 550 + 370 + 1400 per month in debt load, or $2,720 in debt fees.

that means that you pay roughly 400 + 4000/5 + 2700/5 + 325,000/30 or 12,400 per year, and ~1030 per month in interest.

If you maintain your debt at 1/3 of income (sure you do), then that’s $8,160 (3* 2720) per month or ~97,000 (12 * 8,160) per year of take home pay after taxes.

That means your Gross income (salary) needs to be $140,000 per year.

Yeah. that’s not cheap.

So that means without interest charges, you’d have one of the following options:

  1. An increase of 1030 in taxes.

  2. An increase of 1030 in monthly cash (12%)

  3. A HALVING of your payoff period, meaning you would own your car in 2.5 years, your home in 15 years.

Ok, so, of these optoins,

  1. I have a hard time thinking americans will want to increase their tax contributions. But it’s possible. However, the two other solutions will increase taxable income substantially at higher income rates, versus current corporate tax rates.

  2. Increasing your monthly cash might seem nice but as far as I know it would just be inflated away or your debt would increase and the net effect would be small.

  3. Or we can halve the payment periods, (and demand they stay that way), so that you would have NO payments on cars and houses (credit cards in my opinion would simply be paid off through liquidity distributions in order to correct shocks etc. So I don’t even know how to estimate that.)

So imagine what happens when you own your house in 15 years and have not only no interest payments, but no mortgage payments, but you are able to maintain your current standard of living?

Now, assuming that we had (as some of us recommended) simply paid down people’s credit (card, car, mortgage) with the trillions we added to the economy. What would have happened to the world pricing system and the world economy in 2008?

Now, we issue how much debt every year? We increase the money supply how much every year? Now what would happen if we took the single action that would correct the economy in the fastest way possible: paid down debt for those that had it (first), then distributed liquidity (cash) directly to consumers instead of the financial sector? Consumers would pay down debt or spend, and businesses would fight for their new liquidity.

We would need to professionalize banking (access to the treasury) the same way that we professionalized law and accounting, (and to some degree being a CEO and CFO). And we would need to require bonding (insurance) of and possibly licensing (minimum education) people involved in that process, but it’s a well understood subject.

Imagine that your credit was managed by a human being just like your accountant and lawyer, and that they simply administered it as does your tax accountant.

This is trivially easy to accomplish – really.

And it would gut the banking and financial system’s consumer predation, and it’s ability to prey upon our people. It would force the world financial system to work more entrepreneurially and make consumer rents impossible.