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Borrowing is neither positive nor negative; it's ultimately contextual whether or not it has a net positive or net negative effect on GDP/PI/GNI/et cetera (or, in short, the economy as a whole and any measure of the economy's productivity). The issue is how much borrowing occurs, at what interest rate, and with what terms for individuals or firms, and in aggregate. The value of fiat currency is not controlled by people, as MotherSuperior implies. Rather, it is governed by the market system in and of itself, and debt or borrowing plays a major role in influencing the value of currency in terms of the foreign exchange market (positively or negatively). A fiat monetary system cannot operate without debt. The problem with debt is closely related the percent change of the cost of living and the percent change in average PI (average in terms of mode with consideration for a standard deviation), as you implied, and is also related to personal debt and/or government debt as a percentage of GDP. Debt is an important part of the economic system, but our current situation makes it blatantly clear that the consideration for and impact of debt is not simple.It is not simply about fixed rates on mortgages. In fact, fixed rates are generally counterproductive in their aggregate effect. While there is some degree of deviation from this assumption, it is generally true. The financial system could not ever operate at capacity if fixed rates on various types of loans became prevalent. Likewise, fixed rates can often screw the borrower anyway. Predatory lending in general was far more influential in the housing market crash. Some examples include pressuring borrowers into accepting loans for which their income was not sufficient and convincing borrowers that interest only loans at 12-72 months with deferred payment of the principle amount would be financially advantageous. It primarily becomes an ethical concern. I have read examples of so-called "predatory" lending contracts, and while some are legitimately predatory, most which are vilified as predatory are not. This begs the question, who is responsible? Such "predatory" loans can be both advantageous and disadvantageous, depending on the intent of the property owner. Should the buyer bear the full responsibility to understand the terms of a contract? In terms of ethical theory or moral standards, should banks and other financial institutions be responsible for what is ultimately a fact of the human condition (the fact that many people simply are not well-educated, generally speaking)? Should the due diligence required of financial institutions be more thorough than they currently are? Should oversight of individual employees whom often work on commission be more regulated by their peers and supervisors? The answer, of course, is yes. Some of the basic tenets of capitalism, financing, trade, the banking system, etc. must change, and currently are. Lending standards have remained relatively static, with some minimal reform and regulation, for over a century. The standards are validated by the assumption that all parties do or will understand the terms of the contract. Decade after decade, more people enter the financial system in some way, and many of these people are uninformed. Many of the people in the financial system understand this, and have exploited the situation, if only in subtle ways.
An issue I have with your statement arises with the implication that the relationship between the stagnation of average personal income and increased borrowing is somehow influenced by "big business" and "government." The change or lack of change in income over a set period of time is dependent on a number of factors, most of which aren't really controllable (though they can be controlled by the federal government and/or unions, though generally in favor of the employee). Likewise, healthcare insurance costs increasing is a necessity. The solution does not lay in criticizing the employers. The solution is a federal healthcare provider (or, less attractively, federally subsidized insurance through private providers). If any entity is to blame here, it is the healthcare industry itself.
I think you should try to shy away from the class based perspective of wealthy vs. lower/middle class and broad terms like "big business" and "government." It is not a criticism, just a suggestion. Such a perspective is often conducive to formulating opinions and arguments that aren't cogent or valid (and often undermines one's ability to understand a given subject). It's important to remember that "the glut at the top" is caused by both an increase in income for the top 1-10% of Americans and an increase of the percentage of the population in the middle class or lower. The government is no longer a product of one group of people, with one set of interests. There are lobbyists for every industry, and every segment of society. The interests of the poor and the wealthy have the capacity to have a negative effect on the economy equally. Anyway...I'm going to stop now. Sometimes I just keep going and going on economics (though some of this will make a good post for my discussion topic next week in class...so I guess it's not all for naught).
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