[londons_explore]

Hypothetically, what would the world look like if we made all debts dischargeable by bankruptcy, and bankrupcy a process so simple you could just text a number and be done in 15 minutes?

A bankruptcy would simply automatically put all your assets up for a same-day auction. Any unlisted items would be auctioned as a lump, for anyone willing to research what you actually owned to play 'Storage Wars' with. Anyone could bid on those assets (including your friends buying your stuff to give back to you). All proceeds of auction would be claimable by anyone you owed a debt to in a fully automated manner.

In such a world, any time you woke up in the morning and decided the auction value of your assets was below your debts, you could text the number, re-buy things you really cared about for probably cents on the dollar (nobody wants your dirty laundry), and carry on your day worry free.

[vkou]

We'd have less debt, which is bad for the economy, but good for individuals.

[mokus]

If this is true then that’s a sign that we are measuring the wrong things when we talk about “the economy”. If something is good for the economy but bad for people, then fuck the economy. Find a new way to measure it that better aligned with what is good for people.

It seems quite fitting here that Goodheart’s Law came from an economist.

[vkou]

> If this is true then that’s a sign that we are measuring the wrong things when we talk about “the economy”.

Not necessarily.

Consider savings, for example.

Are high savings good for an individual? Well, yes, of course, they are! But every dollar saved is a dollar not spent. If everyone starts saving as much money as they can, this will damage the economy, lower spending, and will make everyone poorer (it's difficult to save money when your income derives from other people spending it.)

Debt is the opposite of savings in this respect. If you go into debt, and spend, it's good for me, as the person deriving income from your spending. Vice versa, if I go ahead, and spend that money, it will eventually be good for you, as your income is another person's expenses.

Does this mean that we should all max out our credit cards tomorrow? Well, obviously not... Just like we should not all become wealth-hoarding Tolkienesque dragons.

It's not clear where exactly the optimal point on the savings-spending axis lies. It certainly lies on different points for different people, depending on your personal wealth, skills, social class, luck, or your personal value system, etc. Some people benefit a lot from a healthy economy. They obviously want everyone else to spend more. Some people benefit very little from a healthy economy. They obviously want to spend less.

It's not a trivial problem to solve. I personally think there are some kinds of debt that are way worse than other kinds of debt. High-interest debt is problematic. High-burden debt (Like mortgages) is also problematic. Debt that inflates asset prices (Like universal student loans) - also problematic. Medium-low interest, medium burden debt (Like most car payments)? It seems less problematic to me.

[pmiller2]

Then, "the economy" is bad for individuals, and we need to make some changes.