Are Reward Credit Cards Bad For The Economy? If You Answered Yes, Are you Sure You Want a Return To The Gold Standard – October 14, 2023
There are a lot of INCOHARANT theories in the marketplace today, which often confuse people. I’ve heard some argue that Rewards Credit Cards are a bad thing? Well, truth be told, this current FIAT-based monetary system we’re under is based on EXPANDING the money supply, which is what Credit Cards do.
Credit Cards allow PURCHASES to happen that otherwise wouldn’t happen. For example, if I did not have a credit card, I’d hold back on certain purchases, to which you might argue that’s a great thing, and I’d reply yes, but under what ECONOMIC system?
The FISCAL policies being employed in today’s world revolve around the government expanding the money supply. Now, if ONLY the government can expand the money supply, you get INSTANT economic DEFLATION.
If you’re not following me here, it’s because you don’t understand how a GOLD STANDARD works. In a Gold Standard, prices DEFLATE because the Money/Capital is in FINITE supply.
So for example if Money were backed by Gold, and the Government we know spent money the way it does today, there would be NO money in circulation for the private sector.
The government is NOT supposed to be able to print money out of thin air and then SPEND it, but it does and when the government spends money, this is ALSO includes REGUALTING activities in the PRIVATE sector market place.
What is FISCAL policy?
In economics and political science, fiscal policy is the use of government revenue collection and expenditure to influence a country’s economy.
In order for regulations to be ENFORCED, the government has to spend money. Law enforcement for example does NOT work for free, so if there was a Gold Standard and the Government had to pay for it’s enforcement arm, it would typically be STEALING money from the private sector via REGUALTONS to do it.
But because of this EXPANSION of the money supply which ALWAYS causes prices to rise, the private sector has to be able to respond with it’s own PROFIT DRIVEN form of money supply expansion.
The difference between the private sector and the Government however are BANKRUPTCIES. Credit Card companies for the sake of their own solvency have make sure the people it lends to are SOLVENT or able to repay their loan.
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This fiat monetary system puts restrictions on both the Private and public sectors, however as we know, the public sector has far FEWER restrictions on money than does the private sector.
It might seem like I’m defending Credit card companies, but what I’m actually trying to point out is that FISCAL policy and not necessarily credit card companies are the rot cause of INFLATION.
I as a store owner can decide to STOP accepting credit card payments, and I could decide to raise my prices, but guess what that does? it creates a DEFLATINARY effect to my bottom-line, because some customers will not shop at my store if I don’t accept credit cards.
Some shoppers like to ABUSE the rewards plans on credit cards and because credit card make money on both ends, they welcome these types of people. Now, I’ve stated in plenty of posts why I’m against a Gold Standard, I do not believe that a Gold Standard will stop the democratic process.
There was a DEMAND for the current financial system we have today, that’s why it hasn’t collapsed yet. Now, why I’ve argued against a CBDC is because humans like PRIVACY, so if A central bank digital currency (CBDC) were FORCED on people, you might see people CHANGING their behavior entirely.
In China for example, their technocratic government already monitors it’s citizens heavily, so the Chinese people behave in ways that many people find hard to comprehend. The Chinese will often do things, purchase things, embrace certain behaviors to avoid the attention of central government, and these behaviors are inherently DEFLATONARY to the Chinese DOMESTIC economy, which is why China is HEAVILY dependent on exports to keep it’s economy afloat.
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For every action there’s a reaction, whenever Government does ANYTHING, people react, if for example credit cards are taken out of circulation, based on the current monetary system, the entire economy might crash, and this crash won’t necessarily be DEFLATIONARY, because history has shown us that if the economy crashes, the GOVERNEMNT will fill the void and some of the people for example using credit cards are BUSINESS PEOPLE, but imagine the government interprets a market crash as treating all credit histories as EQUAL.
Political money equates as is the case in China, equates to a population of people who keep their “radical” thoughts and idea’s to themselves in fears of retribution. Because there’s no freedom of speech in China, and because your speech can be silenced in China, they have a lot of consumer DEFLATION problems.
Credit cards, at the very least give people in western countries the ability to keep pace with inflation created by the GOVERNEMNT. Not everyone uses their credit cards to purchase LIABILITES or expenses, some people use their credit cards to purchase income producing assets.
It’s important to remember that credits charge you MONTHLY, meaning that the cost of your loan could be NEGATIVE if your credit card was used to purchased a cash flow positive asset.
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When it comes to money, try to avoid ONE SIZE FITS all thinking.
Interesting times ahead