I keep hearing warnings about the economy. This morning another article about the auto loan market came across my desk. The total amount of debt people have taken on in order to have a car to drive is now over $1 trillion, an all-time high. Economists and analysts are critical of lenders who gave out loans to people with poor credit scores (below 660). If the economy takes a nosedive, a lot of those loans may go into default.
But here’s the thing…When you set up a system in which all the things people need for survival cost money, people are going to do whatever it takes to get money. When you set up a system of zoning laws in which your house must be built in a residential area, and all the jobs are in industrial or commercial zones a long distance away, you make cars a necessity. Cars are a tool for getting money, not an optional luxury. When you set the price of a car, knowing full well that people NEED cars, and you gouge them with interest payments so that they end up almost paying for two cars, they should be allowed to keep the physical one if they default on the loan. The loan company can keep the illusory second car and whatever interest they made. Getting people to pay interest is based on the idea that we don’t need to produce anything real, we just have to find someone with a need and squeeze them a little so that they produce for us. It’s a lot like the business of prostitution. People who charge interest are like pimps. They force others to work for them and hand over part of their wages. People who pay interest are like prostitutes. They sell their time, effort, and energy doing something they really don’t want to do because they need the item or tool.