[AnthonyMouse]

> And a big fuck you to everybody that has made efforts and sacrifices to improve their credit rating, they can take the same (higher) interest rate as everyone else?

If it becomes harder to get credit then there will be less inflation (or allow the same amount of it to be caused by government printing money instead, which allows lower taxes), either of which means less need for credit to begin with. Moreover, less need for credit means less credit fraud, the cost of which is paid by everyone.

The concept that credit is a good thing is perpetuated by creditors. Credit is a competitive advantage when you're the only one who has it, but when everyone has it it's just an arms race. It's better for everyone (except creditors) for everyone to have less of it.

[greedy_buffer]

I don't know if there should be more or less credit, although it sure seems like an improvement to reduce fraud and have less people up to their ears in debt.

Even if the companies running the system have serious problems, it still provides a mechanism of trust. Most people are likely to experience at least one event in their life, for example an unexpected expense or some long term investment, which would easier to navigate if credit were available.

Replacing the credit score system with the subjective judgement of a creditor introduces arbitrary, discriminatory bias into the system.

If credit is a competitive advantage then isn't hurting its fair availability is somewhat an own goal as long as the USA remains part of a global economy?

[AnthonyMouse]

> Most people are likely to experience at least one event in their life, for example an unexpected expense or some long term investment, which would easier to navigate if credit were available.

For unexpected expenses that is the purpose of insurance. For investment opportunities that is the purpose of savings.

Finding a sensible investment opportunity that provides a risk-adjusted return higher than the interest rate on borrowed money is very rare, because why would the investment company use you as a useless middle man instead of borrowing the money directly from the lender?

> Replacing the credit score system with the subjective judgement of a creditor introduces arbitrary, discriminatory bias into the system.

The existence of bias is independent of the existence of credit reporting.

> If credit is a competitive advantage then isn't hurting its fair availability is somewhat an own goal as long as the USA remains part of a global economy?

Geography mitigates most of that. An engineer in China is not borrowing money from a Chinese bank to bid on a condo in San Francisco because he isn't in San Francisco to live in it. And to the extent that foreign speculators do that, we could prohibit it -- require US real estate to be owned by US citizens or corporations owned by US citizens. They do it to us.

But the more important point is that availability of credit is not the same as availability of money. As an economy expands the money supply has to increase to prevent deflation. The primary way this currently happens is borrowing -- Alice deposits $1 in the bank, the bank loans it to Bob, now Alice and Bob each have $1 in their accounts but in the bank's vault there is not $2, there is only $1 and a promise from Bob to pay $1 plus interest.

An alternative way to create money is for the government to do it by fiat. If they create a dollar then they can charge Bob a dollar less in taxes, or provide an extra dollar in UBI. So as long as the government increases the amount of money they create by fiat by the reduction in the amount that banks would be lending, Bob has the same amount of money in his pocket to buy things with -- but now he is not paying interest on it to the bank.

[emodendroket]

> Finding a sensible investment opportunity that provides a risk-adjusted return higher than the interest rate on borrowed money is very rare, because why would the investment company use you as a useless middle man instead of borrowing the money directly from the lender?

I guess this must be news to all the businesses that reguarly operate on credit.

[AnthonyMouse]

> I guess this must be news to all the businesses that reguarly operate on credit.

We are talking about individuals.

[emodendroket]

The only thing like an "investment" most people are going to buy on credit as individuals is a house, and besides being an investment it's also a place to live in. Arguably that's more salient than the speculation opportunities.

[emodendroket]

Deflation will certainly make fewer people take out loans, but not necessarily because they are living high on the hog without them.

[AnthonyMouse]

> Deflation will certainly make fewer people take out loans, but not necessarily because they are living high on the hog without them.

Deflation is caused by the economy growing faster than the money supply. Increasing the supply of money counteracts this. Both banks and the government are allowed to do this. Banks create money when they make loans; suddenly you have more money in your account but there is the same amount of cash in the bank's vault.

Creating too much causes hyperinflation, so more of one requires less of the other. If the banks lent less money the government could create more.