...Just the same, credit appears all too central in the present - a problem which attests to the degree some of our lives have been stretched to accommodate limited definitions of growth. We have many aspirations, desires and challenges that call to us, all of which we would take on one step at a time if life but allowed us to do so. For whatever reason, one would think our commitments are "supposed" to take place in tremendous chunks which really are sacrifice, in spite of the fact that few such reciprocal commitments are actually waiting for us in the workplace. Just the same, we are still trying to work with the same sets of societal expectations that made more sense when the commitments from the workplace to the individual were more real.
And those commitments frequently involve heavy debt loads. That is the fallout from the present reality, of personal debt loads which I can only apologize to those readers which now have them, for the rationale of this post. For those with heavy debt, credit remains central whether one wants it or not. Be it the home mortgage which one remains "stuck" with, the student loans that may take decades to repay, or the hospital bills one would need to have steady work for years just to make payments on...I can only hope that communities are sympathetic to these individuals in their plights - people who tried to do things right, yet now bear the burdens of a society of which such obligations once were well within the bounds of reason.
For some, credit is still a part of life - within reason, of course. For others of us, credit is a part of the past that will likely not be a part of our futures, so we bid good riddance to credit use in spite of the isolation such a "goodbye" can sometimes engender. And yet it is in an aggregate sense that credit does need to count less for our futures than it presently does. In recent decades, debt became a burden that many simply did not need, and hopes for a debt jubilee - while certainly understandable, just don't seem likely. Even though there is plenty of blame to go around to those in finance who helped life become overextended, they won't change the definitions for us - we have to change the definitions of economic access for ourselves, through the seemingly countless ways in which our communities define it. And changing those definitions will often mean putting credit use at the periphery of our lives, eventually by means that no longer need isolate us for doing so.
So the title of this post is a sort of mantra, in a sense. Yes, Market Monetarists such as myself stress the superfluous nature of credit, and yet some who are sympathetic to the cause cannot always understand why this assertion is so important. For one thing, in a practical sense the use of credit is a distraction from the ways people use money in an ongoing daily sense. Before anyone asks for a loan at the bank, a lot of things about their life or business already need to be in reasonably good order before a loan even becomes a consideration. Those daily life activities: velocity which involves more spontaneous use of money - tend to be "forgotten" when monetary flows are tallied, in part because ongoing obligations may not seem as significant as the contractual arrangements, which are designed to maximize loan potential (bank profit) when it appears the debtor is in fact capable of repaying the loan.
A major part of the struggle now in central banks has to do with the designation of credit centrality as opposed to that of actual aggregate demand, in the guise of interest rate targeting. Some have been distracted by what has happened in this regard in the belief that fiscal policy is more important "anyway". That distraction has proved tragic for some who have consequently lost work, as it only makes it easier for monetary policy to short money supply per capita for each individual while few even notice what is actually happening. Even as a shift to nominal targeting appears more rational - especially given circumstances of the zero bound - special interests know that nominal targeting has the potential to be more transparent as well, and that the focus would eventually become less on what banks are willing to lend (or not), and more on the actual potential of individual actors for participation in the economy itself. Unfortunately, forced austerity especially backs the idea of credit as central, not just in the present but also a future where people are expected to suffer, who had nothing to do with the contractual terms or economic access definitions of the present.
In the past these monetary struggles were not as well understood by the public, if only for the reason that governments had come to be responsible for the economic well being of their citizens in the 20th century...such doings were supposed to be "their job". While similar arguments for government responsibility continue to play out now, citizens are starting to find out what is really at stake, and that they can in fact take matters into their own hands in terms of creating greater economic stability. Importantly, many of the problems that governments struggle with now have roots at local levels that can be addressed. The best role governments can actually play in the present is that of facilitator, for communities to find better ways to create economic momentum. Incremental growth is that which allows people to make progress a step at a time on their own terms instead of just those of the loan officer, and nominal targeting in such a framework is certainly a return to sanity.
No comments:
Post a Comment