Whitley's Journal

How to Fix the Economy: an Ignored Solution

We wait for economic recovery, but it doesn’t come. Millions of us remain unemployed. Whole neighborhoods, street after street, are abandoned, their residents victims of foreclosure. Washington is paralyzed. But the problem isn’t ours alone. Europe is on the brink of fiscal collapse. The Chinese stock market is teetering, and the Middle East continues to suffer political and economic chaos.

The question that burns within all of us is whether or not anything can be done, and if not, then what happens?

There is certainly something that can be done to revitalize the US economy, which is already beginning to show signs of recovery. This has to do with the one area of banking that has remained sacrosanct through the crisis. It is the credit card industry. True, there was a Credit Card Reform Act, but it ignored the central problem.

As great American financial institutions began to collapse in late 2008, the Bush Administration was faced with a quandary: should they let it happen, or should they attempt to stave off the crisis. They elected to provide the banks with vast infusions of public money.

The banks did not respond positively and patriotically to the helping hand extended to them by the American people. On the contrary, they bit that hand. They did it by brutally raising credit card interest rates, and doing it at the worst possible time for the American economy. At the time of greatest job insecurity since the Great Depression, people opened their credit card bills to find that their interest rates had, in many cases, doubled. And this did not simply extend to people with bad credit. People with good credit suffered similarly.

This was done because the economic crisis was causing credit card defaults, and the banks wanted to maintain the profitability of their cards at pre-recession levels. The reason that default levels rose so dramatically is that people who were not creditworthy had been offered credit. When they couldn’t pay, the banks response was to take the shortfall out of the pockets of their good customers.

Ever since, Americans have been wary of debt, and very understandably. I don’t know about you, but I rarely use credit cards anymore. Instead, I’m paying them off. My objective is to become debt free and to stay that way. I don’t trust the banks to loan me money for fear that they will jack up my interest rates without warning. I know that I’m not alone in this, because American savings rates have been rising since 2009, and show no sign of slowing down.

If this is to change, credit card interest rates must not only be regulated, they must be rolled back for customers in good standing who have experienced increases. The rates must be fixed at a certain percentage above prime. This will force the banks to act responsibility by extending credit only to those who actually deserve it, and not throwing credit cards at everybody, then making the creditworthy pay for the losses incurred when the bankrupt fail to pay.

However, the banking lobby has fought furiously to prevent this issue from even being discussed. It was not part of the Credit Reform Act, but it should have been its centerpiece. It is never discussed in the media and in congress, but it is the central reason that Americans are afraid to buy. Until we can be assured that the purchase of a television set today at a 12% interest will not turn into a debt tomorrow at a 24%, we simply are not going to be buyers.

But can Washington change this? Of course it can’t. Washington is frozen between political extremes, and neither of them have a viable solution to our problems. The left, if given license, will sink us in yet more inappropriate regulation. If the right gets its way, all regulation will be abandoned.
What about what most of us actually want, which is fair, effective government and sensible regulation? We want regulation to provide companies with a coherent framework in which to do business and make a reasonable profit. We don’t want it to stifle them, and we don’t want it to be abandoned so that they can wreck our lives any more than they already have.

You wouldn’t know it from listening to the media wailing at us from the left and the right, or the politicians who scream extremist slogans in an effort to agitate us into action, but we are a people who want to be governed fairly by moderation and consensus. Instead, congress is divided into warring camps and nothing useful is being done.

A good place for consensus to start would be to fix the credit card industry. It is the one sure way to restore demand, and essential if demand is to be sustained.

Will it happen? Certainly not. Washington won't touch it. And that, I think, is a damn shame and an outrage. We need new brooms, and not liberals or conservatives. Moderation is the American way, and we need to seek out political leaders who understand that fact, and who also understand how government by consensus works.

We need to stop letting the leatest media loudmouth turn our heads and trick us into sending extremists to congress. We need people of moderation, both Democrats and Republicans, to step up and take the reins of leadership.


I don't know why You have only 2 parties. We have (+-) 7 different parties here. Mostly consisting of non-wealthy politicians not relying on corporations for funding. School teachers, firemen, small farmers, haircutters, students, historians, small entrepeneurs etc. They get paid 100.000$ a year serving. The hole world would be a different place if You had hole parties of Ron Pauls, Jimmy Carters, Obamas and some socialists parties also. People love those. They care about the young, the old, the unemployed, the poor. Vote for a rich corporate guy and You get just that. It can't be that hard to start a party that cares about the people in the US? You are the 99% and every vote counts. It should be damn easy. Michael Moore is more like an average european I think, except he looks a bit heavy. We don't take crap here. Americans are the best of people but they need to learn how to take control. Until that happens You are stuck with corporations ruling Your life. They don't here.

That's all well and good and for years I only bought things with CASH. But with the new "computer world" I HAVE to use a Credit card if I am to but anything even off the UC site. Therefore I am trapped by the bankers and whatever they want to do with their cc interest rates.

Yesterday I foolishly went into a sporting goods store to buy something and was directed to a computer to buy it!!!!!!! WTF? Hwy ahve any bricks & mortor at all?

You didn't say exactly where you're located. You need to live in America to understand; the people here are very complacent and lazy. They will not stand up to just about anything, including blatant injustices, except in very small numbers. Our water is fluoridated, helping to assure docility and compliance. Change happens only if a politician(s) is/are sufficiently embarrassed. There is little to no legal remedy against the government here; all actions by default protect The State first. The State is also our largest employer, which should ring of something close to communism by most people's standards, but is for some reason ignored. The corporations are not the ones in charge. They simply benefit from the banking game and therefore pay for it to continue. The creators of our money supply, which are not a part of our government, are the real people in charge. And you'll never see legislation attempt to circumvent that power by too far a degree, since legislators themselves benefit as well from that system.

America is the puppet, that in turn pulls the rest of the world's economic strings. The true puppeteers are the private banking entities that provide our debt. Countries exist that don't HAVE private banking...the control of the currency is in the hands of the government, the way it should be, as one of the very few legitimate purposes of government. Perhaps you live in such a country. Americans do not.

I used to work in banking and those people are very sly and crafty. They don't look out for the economy or people. They only want to make piles of money. They really don't want people to save because then they will have to pay interest on that money. The charge card industry, even if it's unsecured loans, are their biggest money maker. You can have a $600 monthly payment and $300 of it is interest. No other loans like mortages or home equity or short term loans gouge like charge cards do. They are the legal loan sharks.

The 2 party system was crafted by foreign con artists with the intention of undermining the integrity of the system as a whole. This malicious propaganda campaign goes back to the Civil War and further yet, still. They either get it together, fly with both wings and play it like the good old ball game they've been trying to foist it off on us as... and reverse the charge in its favour, turn it into something good -- or people are going to start firing shots and lighting torches. That is how this ball tends to bounce. In any country.

Well said, Whitley. Another ignored solution has been staring the banks in the face for two years now: The Robin Hood Tax.
The idea is that 0.05% would be charged on every stock trade, preferably in all exchanges in the world but certainly in the UK, Europe, Canada, and the US. If the tax were world-wide we could wipe out the world's deficit in five years. The tax is miniscule but the banks and financial "services industries" are fighting it tooth and nail. It's a simple, elegant, brilliant idea whose time has come. Check it out.

Great documentary film, thanks.

what was that basic formula that i learned in accounting 1o1?, debits plus or minus? credits = capitol and add in depreciation of or is it depreciation of? oh hell don't be confused, in the language of the other side of the brain aka music, art etc, honey you either got it or you don't. If massive earth changes don't get us we will pick up the financial pieces, Whitley is right!

The two party system often leaves us with no real alternative between the Dempublicans or the Republicrats. The credit card companies entice people into debt with such low minimum payments that they become indentured servants. We need to get back to producing goods that the world will want to buy instead of being an economy based on paper shuffling.

I think US is more like a corporation than a country. Everybody is doing what the "boss" wants. A few people like Glenn Beck, Ron Paul, Michael Moore, Alan Grayson, T-party and Occupy movements are speaking out against the lunacy and theft:
Here in europe (I'm in Denmark) we have all the politicians loving the European Union which is fast becomming a giant socialist state. Money printing and nationalization of banks comming soon.
The chinese are controlling more and more of the earth minerals, energy resources and production of all the things we buy. They are clever.
I really hope people here in europe and in the US wake up and take control. Then all the things like credit card fees, interest rates, Credit Default Swaps, minimum wages, social security, bank regulation, pollution, high frequency trading, healthcare, education can be changed to suit the citizens. The ones paying for the hole thing.

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