In Focus Consumer Credit
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to appropriate more funding than most fiscal expert experts could
imagine in their wildest nightmares when, in their waking moments, they would caution members of the public not to take on more debt than they should if they wanted to avoid making repayments totalling far in excess of the original amount borrowed while never being solvent enough to clear the debt completely. This said, as in the case of poorly developed
countries, where has been proposed that the crippling amounts of state debt should be wiped clean, thereby allowing them to invest in desperately needed infrastructure, perhaps something along these lines should be considered for individuals trapped in crushing burdens of insurmountable debt, unlikely ever to decrease because of the interest levied, with no respite in sight. Moreover, for those debtors who manage
their credit sensibly and keep it within sensible limits, they should not have to live under a continual threat of what they to do if job loss, disability' or if an unexpected market crash impacts on their financially fragile status quo. Or, to put it another way, given the
economic implications of the ongoing pandemic and the resultant borrowing action taken by the government, it seems reasonable to ask what could be done in parallel for millions of individuals, who, despite short-term assistance, are finding it difficult if not impossible to meet their longer term personal and family responsibilities.
In a similar vein, this applies to SMEs
because of debts they can no longer carry, along with the prospect of being unable to get sufficient credit or loans to tie them over for Heaven knows how long.
Early learning Having put forward a number of points, and a few nudges for deficit spending brain boffins to ponder over, I was reminded of article on 'Early learning' I had published in this magazine in October 2017, where I assumed the role of a teacher trying to explain – with some difficulty – to a class of nearly seven year olds what credit and interest were all about when their only source of regular income was weekly spending money. There was also the problem of making
clear that while credit and interest were of considerable importance in how the world was run, neither could actually be seen or touched, like coins or paper, or plastics notes held firmly in hand. The lesson ended in telling the pupils
that the business of credit, interest and the whole caboodle of lending and borrowing was what “keeps money going round from one place or person to another, which so many clever men and women in the government say is good for the country we live in. Otherwise, many of us would be unable to buy just anything we wanted, whenever we wanted to. Some say that would not be very nice, or even sad, even though others think we should not spend
There was also the problem of making clear that while credit and interest were of considerable importance in how the world was run, neither could actually be seen or touched, like coins or paper, or plastics notes held firmly in hand
money which is not really ours to spend because we have not earned it yet”. The teacher then wished the children a
pleasant weekend and encouraged them to – “do try and remember what I said today, especially about any pocket money you might get tomorrow and whether you decide to spend part of it, all of it, save some or all of it for another day or lend or borrow more than you have been given. Perhaps you can even think of more ways
to keep the country's money going round and round, and then tell the rest of the class all about it on Monday”. If I had written my October 2017 article
today, I wonder if the teacher would say anything different, although I suspect there would be more emphasis on washing hands and keeping distance, with little or no mention of money matters, since the parents and other relatives at home were already talking and worrying about their household incomes, and probably having done so before the lockdown was in full swing. As to what else the teacher might say,
namely whether the school would be open full or only part-time, or in danger of yet another closure or what the chances were of a second spike, I think I will await further developments and keep more than two fingers crossed until either the foreseeable or the ‘before too long’ future arrives within the next 10 to 15 years when those in the class will be old enough to start accumulating their own personal debt, which will inevitably include an extra amount borrowed for higher taxes, so that the government of the day can continue to service the recently enlarged national debt now off and running without much pause for breath. CCR
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www.CCRMagazine.com September 2020
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