Eliminate all debt in the world. Debtors instantly receive printed money equal to what they were owed. Further debt is now illegal.

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Temporary_Character@reddit

Slavery and indentured servitude would skyrocket.

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Vreas@reddit

It would fuck a ton up from home ownership to cars to starting a business.

How many people do you know who can afford to pay outright for a car? Let alone a home.

I agree it’s got its issues but the alternative would be totally dysfunctional for society.

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ToastyWaffelz@reddit (OP)

"How many people do you know who can afford to pay outright for a car? Let alone a home."

Thats the point. Sales will drop until people CAN actually afford a car or home by purchasing it outright. Otherwise, the people selling them would never make any money. Boom. You now don't have to work 30 years to afford a house. You now work like 5 years for it and be homeless or live with family. Or something.

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SeaUrchinSalad@reddit

The something is what would happen lol

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Emergency-Style7392@reddit

Who do you think owns all the debt? Rich people. What do you think happens when all the rich people have massive cash influx and the poor people can't get a loan.

Well it means they start buying up everything available

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Smort_poop@reddit

If this happened like OP said, banks would probably make trillions, as they would no longer have to pay their depositors back but would still have the money they got from the depositors

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imtoooldforreddit@reddit

Banks would no longer exist though. The reason they exist is to loan money.

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Smort_poop@reddit

Once debts are all magically paid back, the banks would make oodles of money but then yeah, like you said, they’d have nothing left to do.

Also like you said, without any form of debt you just couldn’t do anything in today’s economy.

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AdOk8555@reddit

And Boom there will be no one willing to build homes any more. You do realize that the price of a home is not arbitrary, right? There is the labor to build the home. I guess all of those people should just work for pennies an hour. Then there are the materials. Those require people and machinery to produce. How are they supposed to be paid if a house is only what someone can save in a few years time. The only homes that will become available will be barely habitable. This is a terrible, terrible idea.

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Dragon124515@reddit

Counterpoint, wealthy investment groups. Already in our current system, we have a fluctuating range of 10-30% of homes (depending on the location and year, only looking at US numbers) being bought by investors so that they can immediately be turned into rental properties. My guess is that what would actually happen is that the percentage of homes being put up for rent would skyrocket, and home ownership would be relegated to something like high middle class and above only as a general rule.

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Not-Meee@reddit

High middle class people don't make enough to outright buy a house

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Dragon124515@reddit

I will admit the exacts of what specific wealth class would be able to afford a home wasn't thought out too much. The point was more just that you would need to be quite well off to ever hope to stop renting.

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thinsoldier@reddit

The world is full of places where every home is exactly what they can afford. Somehow I think OP has never seen a documentary or photo of anywhere poorer than Greece.

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AdOk8555@reddit

I've certainly seen the homes that the "homeowners" were able to put up using whatever scraps they could find, I've been to many poor parts of Mexico and just got back from India a couple weeks ago. Considering a home is something that has value for many decades, I would much rather live in a home I can pay for over 30 years than one I could save up for over the course of 5 or 10 years. During the course of that 5-10 years I will have to pay rent which would greatly decrease the amount of money I could save towards a home. Rather, I can buy a home and transfer my rent to pay the mortgage. OP has zero understanding of how an economy or commerce works.

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shartmaister@reddit

So the ones building the house should do it pretty much for free?

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Total-Tonight1245@reddit

Very rich people would buy them and then lease them out. You’ve created a world where only the very rich can own property. A new serfdom.

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OptimismNeeded@reddit

Are you gonna build me a car for $50?

How are you gonna pay for the materials and help without debt? 😂

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lamppb13@reddit

Or something 🤣

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Vreas@reddit

I think you’re severely underestimating how expensive it is to build a car or house lol

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DuineDeDanann@reddit

good thing there are used cars and we don't need to build new models every single year. People can already afford to repari cars, and even more so when they arent paying off student loans, and mortgages

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madhousesvisites@reddit

Used cars used to be new cars

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icorrectotherpeople@reddit

The world you're describing is alive and well in Cuba. Go for it

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MiraCZ@reddit

You totally forgot that there are rich people that will keep buying everything and just rent it to normal people

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tim36272@reddit

Just think of what you're implying at a very basic level. The median income in the US is around $40,000, for two people let's say $80,000. Lers assume a third of that can go to housing once you account for taxes, food, insurance, etc. which is $26,666. Times five years that's $133,333.32.

Let's say an average laborer/contractor/etc. is billed at $50 per hour (note that's not their income, that's just what they are billed at to account for overhead, capital equipment, tax, etc.). Some types (e.g. electricians) make a lot more, others make a lot less.

If half the cost of the house is materials and half is labor then that leaves $66,666 for labor. At $50 an hour that's 1333 hours.

Do you think a house can be built in 1333 hours? Even if you only had four people working on it, that's only two months of labor. I doubt it.

Tl;Dr houses are expensive to build. I'm sure people will nit pick at the numbers, but the order of magnitude won't change.

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Bitter_Emphasis_2683@reddit

The order of magnitude is actually worse than that.

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cum-yogurt@reddit

cars are actually very reasonably priced for all you're getting. and i'm pretty sure the margin is already rather low, they count on high volume.

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buzzerbetrayed@reddit

You’ve never stopped to consider why houses are so expensive?

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Vreas@reddit

I mean sure things like hempcrete and what not would help but no way you’re paying out of pocket for all the labor and material costs all at once unless it’s a tiny home.

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autokiller677@reddit

This many people taking out loans for cars is afaik an US thing - in many other countries, people mostly buy cars they can pay cash for.

But houses and business, totally agree.

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Maybe_Not_The_Pope@reddit

Few countries rely on cars as much as the US. They also have many smaller, cheaper versions of cars that lack most options we think of as standard.

Driving 10 minutes without AC in England is different than being in traffic for 1 hour in Texas without AC.

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autokiller677@reddit

Sure, there are differences. But not everywhere in the US is Texas.

And looking at a popular used car selling site here in Germany, within 100km of me, I find 18.000 cars total below 10k€, and 12.500 of them have AC. Even though AC is surely not seen as mandatory here.

From what I see / read, many people in the US just buy fancier cars than they can afford, instead of going with a smaller, used one they can pay cash for.

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Maybe_Not_The_Pope@reddit

Somewhere between 40-70% of cars are financed or leased in Germany, depending on what data you use. In the US, the numbers seem to be around 80-85%.

Many job listings in the US will require you to have transportation, and most kids need a car by the time they're 16 or 17.

Its not just Texas either, almost every state in the US requires cars, the median commute to work is 27 miles.

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autokiller677@reddit

Jobs requiring cars has nothing to do with buying a car you can’t afford.

And I have trouble finding good numbers for private car loans in Germany. 2/3 of new car sales in Germany are to companies, which is usually on a lease. So if this is in there, the amount of individual people actually financing will be much lower.

Regardless, what I find is that amount loaned is about double in the US $41k vs 20k€ in Germany. So maybe my paying in cash in the previous post was not entirely correct, but it looks like less people are financing, and if they do, it’s for a lot less money - so to me, it looks like people are overall more likely to buy a car they can actually afford.

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GangstaVillian420@reddit

The only real issue is that most people aren't financially literate and have beliefs that are completely incompatible with how the financial system works.

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Vreas@reddit

Or lack the resources to be able to engage it effectively

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Proper-Ad7371@reddit

Might be less disruptive if it was credit card and student loan debt only. Leave secured loans like car and home alone, but get rid of unsecured debt.

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autokiller677@reddit

This would cement who has money and who doesn’t even more.

Consumer debt (cars, credit cards etc.) is a big problem. But if used correctly, debt is a tool that enables opportunities.

Sure, I can save for a house and buy it cash at some point. But for many people, that realistically means waiting decades longer for the house.

Even worse for businesses: you have a great business plan, but did not inherit a bunch of money? Guess you don’t get to have a business. Maybe someone who already has money gets to do it, so they have even more.

Or an existing business sees a growth opportunity, but doesn’t have the capital to invest at the moment. Well, no another larger company can come along and take it.

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Dpgillam08@reddit

Ancient rabbinical law put hard limits on how much interest could be charged on loans. It also required all debts to be forgiven every 7 years.

This actually limited the amounts that would be loaned; no one would give you a loan for more than you could pay back within the time frame.

But, as many have pointed out, A large portion of the high price for things currently comes from how high labor costs are.

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ladylucifer22@reddit

cue new edition of Protocols where the Jews suck at lending money

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AdvetrousDog3084867@reddit

wouldn't this also destroy banks? like banks can't loan out money so now they have no reason to hold money. So now you can't deposit money in a bank and have to just have wads of cash lieing around, or do something like safety deposite boxes where you have to pay to have banks store your money.

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Nguy94@reddit

Why get your first home in your 20s when you could get one in your 50s instead? What a silly idea lol. Debt isn’t bad when utilized properly.

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inkman@reddit

When I suggested getting rid of all [redacted], my crazy post was deleted because it was too [redacted].

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deleted_by_reddit@reddit

[removed]

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Ok_Button3151@reddit

And then 90% of people would never be able to own a home because they can’t afford to save $200k at an absolute minimum. This may just be the worst idea I’ve ever seen

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gc3@reddit

Good way to collapse the money system. All money is tradable debt. Even cash, which is prepaid taxes.

So when you get a job, the employer says.... You work for a week, and then I'll pay you for the work done. This contract doesn't seem to be a debt, but does, the promise pay in the future is a debt and it will show up as a liability item in the employers accounting.

Any contract that involves the future involves debt. 'when you deliver these 30000 widgets to my factory I will pay you 600k dollars.

You owe widgets, the factory owes money, if either party defaults they can be sued for debts unpaid.

The most even the most militant religious could ever get was to ban interest which will have so many loopholes in the modern era...

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Brian_The_Bar-Brian@reddit

Reported for complaining/soapboxing. This is not a crazy idea.

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ToastyWaffelz@reddit (OP)

oh yeah you're right its a totally normal and sane idea damn I should try harder next time I guess

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random_user0@reddit

I think you suggested re-inventing the jubilee year https://en.m.wikipedia.org/wiki/History_of_debt_relief

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terra_technitis@reddit

I think you just mean; what if property prices were based on what someone could save and not on what kind of mortgage they qualify for. By its very definition a mortgage is debt. At least for the first generation or so you'd witness a lot of very upset people trying to reconcile the ammount they've paid into the things they bought with debt with what they can get for it with cash. Even if you managed to get rid of traditional commercial lending you'd be hard pressed to stop people from selling higher value properties through seller financing simply because most people view things like homes or land as stores of value. If you really went to town on getting rid of all lending you might see a drop in consumer goods pricing, but a huge uptick in leasing for more durable goods and real property.

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ToastyWaffelz@reddit (OP)

the idea is to remove them as a store of value and treaf them like what they are, a basic necessity, and thus their price should get cheaper and they should be easier to acquire over time, rather than harder.

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terra_technitis@reddit

I understand your overall intent. But you only paid off debtors. What about the people 70% deep into a mortgage for example? Sure they dont have to pay off that final 30% but most people make financial plans hoping that their house is going to sell for more than they put into it. Now theyre faced with a probable loss if they need to sell, a loss they may not be able to afford. The adjustment period would probably be long and painful. People would become less mobile and instead of selling to someone who likely doesn't have the means to repay them theyre going to have to hold onto the property and lease it out and maybe lease a less.costly proerty themselves if they want to downsize or relocate. You might want to start with wiping out all the usecured debt first. Then gradually work your way up the foodchain so new items can be priced within peoples reach and gradually drive down the cost of exsisting markets.

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Falkery@reddit

Right but I think he’s challenging that exact concept. People shouldn’t be treating homes as investments. They should be treated as a basic necessity, the financial plan shouldn’t even be in the question. I would say one of the best working examples of OP is Japan. Their housing economy is cheap and affordable, because the culture treats homes as a basic necessity not a stock to invest in.

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terra_technitis@reddit

They're advocating for the elemination of lending all together. They also were only offering only to compensate lenders with no considderation for people who have invested their livliehoods into their homes with a lifelong cultural expectation of mobility and a likely eventual return on investment. I do like a lot of Japans attitudes towards home ownership, zoning and depreciation I'd remind you that they still have mortgages and other types of lending, so OPs idea would still be a huge disruption for their current system as well.

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Atom1cThunder@reddit

Debt is fine, remove usery (interest) and life would be fair.

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Primary_Crab687@reddit

Have fun buying a house in cash.

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ginger_and_egg@reddit

Are you also banning Muslim banking? Interest isn't allowed, so instead of a mortgage you agree to a payment plan for the purchase (that just to happens to be similar in price to the mortgage with interest)

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Ok-Lavishness-349@reddit

You: "feel like pulling money out of thin air to pay for stuff, instead of actually saving up money, has a negative impact on pricing models"

Also you: "Debtors (sic) instantly receive printed money equal to what they were owed"

Wouldn't paying off debt holders instantly with printed money involve pulling money out of thin air in a way that debt does not? Individual debt really involves using other people's money, and paying them for this privilege, rather than "pulling money out of thin air".

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ToastyWaffelz@reddit (OP)

idk dawg my idea primarily hinges on 'you cant use other people's money to pay for stuff', so how would that work?

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Ok-Lavishness-349@reddit

Well, if I have a backhoe and you are a plumber needing a backhoe to dig up a sewer line, I can let you use mine in exchange for a fee (rent), right? How is that different from someone with excess funds letting you use them in exchange for a fee (interest) to buy a house?

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ToastyWaffelz@reddit (OP)

Nah there's little difference, it's just it would be funny if you could do it with the backhoe but not with money. Also a backhoe can't rapidly inflate in value unless shenanigans are going on, but money can, seemingly randomly, fluctuate in value for little reason.

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Ok-Lavishness-349@reddit

You are worried about money inflating in value??

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ToastyWaffelz@reddit (OP)

no like, money gets more worthless over time for no reason, right? it should stay stable like a physical good or a raw material or something idk

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ginger_and_egg@reddit

It's not for no reason. Low positive inflation is targeted by central banks in order to avoid deflation. Because deflation is worse than inflation

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Ok-Lavishness-349@reddit

Well, ideally yes, or at least a very low rate of inflation. But, loans can work even with inflation; the lender just needs to keep in mind the expectation of inflation when setting the interest rate that he/she is willing to lend at.

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terra_technitis@reddit

Everything becoming a rental or lease would be the most likely outcome since its not technically debt. It would.definately be an unfavorable outcome for people who were hopi g to recoup past expenses.

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Ok-Lavishness-349@reddit

The question is, in what sense is rent for a capital asset like a backhoe different from interest on a capital asset like money?

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terra_technitis@reddit

In a world where loans are illegal the biggest difference is that everything will depreciate in value for the owner. Any trade would either be roughly apples for apples or have to be accompanied by other assets if they wanted to get something more valuable. Leasing or renting would be more akin to a service where overhead is dedicated to maintenance, upgrades, and building a savings before any profits are realized. The lessee is going to have to have access to enough cash or barter to cover the lessons price up front and will continue having to pay up front before any renewal of their contract. I couldnt imagine such a world.

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Ok-Lavishness-349@reddit

I couldnt imagine such a world.

I think that you and I are on the same page then. I too would think it ill-advised to eliminating the ability to loan or borrow money with interest.

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terra_technitis@reddit

Totally. All out elimination of lending is a good example of what "throwing the baby out with the bayh water" means.

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Unusual_Pay8364@reddit

You just described taxes

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ThisReditter@reddit

Money is a medium. Say there’s 3 meals and 6 people. Each meal cost $100. Among each 6, there are $300, some more than others

Now say suddenly, $100 is given to each person, we now have $900 among each other. Will each meal still cost $100?

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FnAardvark@reddit

Oddly enough, when debt is created, the money is pulled out of thin air. The money that the bank gives you for a home loan doesn't exist until they give it to you.

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Greenmonster71@reddit

It takes two to tango. Not the creditors fault people borrow money . Can’t let all the people who have borrowed money off the hook.

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UrbanWalker1@reddit

This was the case for centuries in Catholic Europe, if I'm not mistaken.

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Kestrel_VI@reddit

Can’t pay for my car repairs atm, without a line of credit that means I can’t get it fixed, which means I can’t get to work, which means I can’t pay my rent.

The concept of interest, sure, I’d understand getting rid of that, but then how would any lenders stay in business when people don’t pay back their debts.

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zzay@reddit

You do know that business and companies assist need debt to expand and create jobs?

No future debt means no expansion, less companies, less jobs

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alex20_202020@reddit

Do you want to remove only monetary debt? Only technically or also workarounds (as another commenter mentioned workarounds for religious no-interest on debt)?

Workarounds are simple: A sells rights to car (which A owns) to B for 1) 100 moneys + 2) option to buy back for 110 within a year. No car? Future hard labor is "collateral".

Do you want to cancel all debts of any kind? Then no contracts with future actions (inc. employment) are possible.

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Agitated-Ad2563@reddit

I mean, the mechanism of "printing money" is actually issuing more debt. One doesn't really help with another.

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Unusual_Pay8364@reddit

The way we do it now, yes it is bad... The way it is suppose to be done is however good.

I'm not a big fan of life long debt, and even less so on compound interest.

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JacobAldridge@reddit

Debt has made me wealthy. As the saying goes, it’s a wonderful servant and a terrible master.

What makes you think the absence of debt would lower prices, versus concentrating asset ownership in the hands of the wealthiest who can afford assets without needing debt?

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Micky-Fishbones@reddit

So unless you have 400,000-1,000,000 in cash, you can’t buy never own a home.

No car unless you pay for it all at once in one pile of cash.

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alex20_202020@reddit

All wages will be paid in advance - companies are not allowed to owe employees money. Do you like it?

Taxes too...

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PublicToast@reddit

Read Debt: The First 5000 Years by David Graeber, this was the original meaning of Jubilee.

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Turbulent-Name-8349@reddit

Let's just not accept Visa, MasterCard, American Express or Diners. That should fix it.

To go into debt you have to walk into a bank branch and convince them to lend you the money.

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Tunavi@reddit

Rick and Morty already did this actually

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xblackout_@reddit

Instead, we can simply print money and give it to everyone.

That's what I'm doing at Bitcoin UBI

BitcoinUBI.com

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deleted_by_reddit@reddit

[removed]

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FlightSimmer99@reddit

Well I guess this might work if you want hyperinflation and the collapse of worldwide economics