Korean Job Discussion Forums

[Fox]

[Rusty Shackleford]

[Fox]

[Rusty Shackleford]

[Fox]

My next step would be the elimination of the fees credit companies charge businesses when credit cards are used to pay those businesses. As things stand, every time you pay with a credit card at a place of business, the credit card company -- in addition to any fees or interest you are charged -- charges that place of business a not inconsiderable fee.

Realistically speaking, the vast majority of businesses cannot avoid offering credit payment options because of how entrenched credit cards have become in our society; almost all of us use them, and almost all of us expect to be able to use them. Therefore, they simply must pay these fees, which in turn means they have to raise their prices to make up for it, which in turn is paid by us all. Even if you don't use credit cards at all, this results in you subsidizing credit companies to some extent with every purchase.

By banning these fees, credit companies would be forced to make up these costs where the costs should have been in the first place: in the monthly bills of credit card holders. The price you pay each month (which would be higher) would be more accurately reflect the true cost of the service involved, and the higher cost involved would make credit less desirable overall, which is good. In addition to the benefit of reducing total credit in our society, small businesses and those who do not use credit cards at all would also benefit for obvious reasons.

As to why I feel this cannot be solved by the free market, I'm driven to ask is where would the reform come from? Most consumers are very uninformed regarding this topic, and consumers are the only realistic potential source of non-governmental reform on this issue.

[Rusty Shackleford]

Market forces are already rectifying the situation.

http://online.wsj.com/article/SB124104752340070801.html?mod=googlenews_wsj


People are using debit cards for most of their plastic based transactions.

The horse has already bolted. What can regulation hope to do now? Except worsen the situation. Policy makers are great at creating solutions to problems where the damage has been done, but where were they back in 2001 when this all started?

All that regulation will do is further cripple companies that will have huge defaulting loan books anyway. As per the article that I posted this morning, fees will rise for those who use cards responsibly while those who caused the problem take a rest.

[Rusty Shackleford]

[Fox]

[Rusty Shackleford]

The political establishment knew all along the risk of allowing personal debt to run up. However, they stood aside for the sake of political expediency. Now that the horse has bolted, they ride in all guns blazing, to save the day.

Forgive me if I seem cynical, but to advocate a govt solution to every ill, is to me, trite and foolish. The market is already repairing the "problem", foolish legislation can only impede the remedy.

Your country wasn't built by the government and it won't be rebuilt by it either.

[Kuros]

[Rusty Shackleford]

^

Who cares?

People are moving away from credit cards anyway so the bill is largely irrelevant. It's politically useful to look like you are doing something but what effect will it really have? Except for make credit cards useless?

[Pluto]

The bill may very well pass. However, I remain very skeptical. Like I said, Congress is simply just plugging a hole. The problem will just arise elsewhere. What do we do then?

We have to get to the Gordian knot of this whole issue which is monetary policy. The fed continues on with its ZIRP + quantitative easing (unlimited credit for wall street and monetizing US Gov't debt). Once the money velocity speeds up again, a bubble will expand, grow and pop somewhere else. Then we'll be right where we are now, only in worse shape. We'll be in worse shape because debt will be much much higher. I've got no faith in the fed to do the right thing; they won't raise interest rates in time. They'll do so only after it's too late. It's the same with the rest of the central banks around the world. The money supply cartel will fall behind in tightening the monetary spigot as well. The world will see even more debt.

So, yes, there will be less credit cards, but where will the bubble pop next?

[Kuros]

[Rusty Shackleford]

[Kuros]