Tuesday, July 11, 2017

David Ruccio — ‘Til debt do us part

Sometimes you just have to sit back and admire capitalism’s ingenuity.
It’s able to make profits twice over. First, capitalists know that, when they keep workers’ wages down—even when there’s “full employment”—they can make spectacular profits. And, second, they can make additional profits by loaning money to those same workers, who are desperate to purchase goods and services and send their children to college, thereby financing the demand for the goods and services industrial capitalists need to sell to realize their profits.
Thus, as we can see in the chart at the top of the post, the amount of consumer credit is once again soaring to record highs. In relation to personal income, consumer credit fell after the Great Recession (to just under 20 percent in December 2012)—as households “deleveraged”—and then it began to rise once again, reaching 23.3 percent four years later.
Occasional Links & Commentary
‘Til debt do us part
David F. Ruccio | Professor of Economics, University of Notre Dame


Dan Lynch said...

The bookkeeper at a small ma and pa company where I worked in the early 80's told me that the company made most of their profit on interest charges on overdue accounts. Their profit margin on regular sales was slim but they were raking it in on interest charges. The customers with bad credit who were always behind on their bills were the most profitable. That stuck with me all these years.

I've heard similar claims about the credit departments at Sears, GM, etc.. That's why when you shop at Sears they always try to get you to fill out a credit card application and make your purchase on credit.

Matt Franko said...

Record profits this quarter :