Let’s take a short look back at history. At the end of the depression of the 1930s, nobody trusted banks. That was because banks were failing, and if you put your money in one today you could lose all that money tomorrow. With nobody trusting banks, everyone used cash or bartering to get what they needed. There was no credit for the most part, except some one-on-one loans like your buddy loaning you $10.
The 1930s is two or three generations ago. That generation of people who either lived through that depression or were born at the end of the depression handled money very differently from people today. They knew you had to work for what you wanted, nothing comes cheap, and there isn’t a lot of money to go around. If you are young and reading this, you will be tempted to laugh at those words. But they are still as true today as they were almost 80 years ago.
In nearly all cases, credit goes against those rules. If you get credit, you don’t have to work hard to have something now. If you have credit, you pay next to nothing up front – its cheap! And if you need more credit its easy to get it, in fact its easy to get so much that you can’t handle it in many cases. This is why many people today will laugh at those things people 80 years ago knew. But they are wrong to laugh.
For the last decade or three, marketing has targetted young people with the message they need to buy! buy! buy! If they do, they will be hip, cool, smart, and have lots of fun. And credit will help them on their spending sprees! The problem is once you start down the path of instant gratification – you see an ad, and you run out and buy the item – its very hard to stop. The very idea that you have to wait for something is unbearable. By this point, if someone tells you how much interest you are paying on your sources of credit to support your buying habits, you don’t care. Or more to the point you care more about filling your need. That is the true sign of an addiction. Yes, society is addicted to the instant gratification provided by buying what they want when they want, no matter how much it costs.
We are seeing today the effects of taking away that credit. What happens when you take drugs away from a drug addict cold turkey? Its a painful experience for them. So too is the lack of credit today. People who can no longer live the fun exciting life they are used to, barely know what to do with themselves. Businesses who are used to operating on credit to keep their operations flowing, can barely meet their bills without credit (if they are lucky).
As painful as the current lack of credit is, its a necessary step to start society on the road to recovery. Much as with a drug addict, you only start to think of your options when your thing of addiction is removed from your life. If going back to it is not an option, then you have to make a decision without it for the first time in ages. This is scarey, and you might not make the best decision. But the process is a great first step.
Can a society live without credit? Quite easily. Think back to a time before banks were on every corner. Did people survive back then? Sure they did. They even had fun! We can too, without going back to living in the past. We can enjoy a modern society, without credit, and enjoy life while we are doing it. Of course there will be changes, and some of them will have to be big ones. But at the end of the day without credit you own your possessions, you control your life, and you know where you stand. Not to mention having more will power from using all the time. I look forward to that day, and you should too!