The Instigator
TheConsultingHistorian
Pro (for)
Tied
0 Points
The Contender
samadkins29
Con (against)
Tied
0 Points

There should be a limit of how much private debt a household can have relative to it's income

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Voting Style: Open Point System: 7 Point
Started: 2/4/2014 Category: Economics
Updated: 3 years ago Status: Post Voting Period
Viewed: 375 times Debate No: 45168
Debate Rounds (4)
Comments (1)
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TheConsultingHistorian

Pro

If households had a limit on their debt (say 5x-4x) relative to their income the severity of both booms and busts would decrease. In "booms" many consumers feel safe in taking on way more debt than they can effectively pay off. This unsustainable buying on credit turns the whole economy into a bubble. When the bubble deflates people loose their jobs and have no way to pay back their debts which makes the situation much worse. If people wouldn't be able to take on all that debt in the beginning there wouldn't have been such a big "boom" but later the "bust" wouldn't have been as bad. The main idea is to get away from booms and busts and to the "grow line" (the ultimate growth in the economy).
samadkins29

Con

You cannot prove that limiting debt has a direct relation to effectively paying debt off. Mandatory classes in economics and debt management would be far more effective than having a 3rd party decide how much debt you can take on. I could argue that the 4 major credit bureaus already limit possible debt by deciding credit limits. This does not directly relate the action of paying off debt. Based on your model, a person making $100K a year would not be allowed to purchase a house over $400-$500k even though monthly payments would be well within a payable amount.

You cannot give a fixed (5x or 4x) factor based on to many variable in ones income and expense. We already have a system that does that. Credit bureaus already do this by providing a credit score but this is based off the likeliness of the debt being paid back vs a direct limit based on household income.
Debate Round No. 1
TheConsultingHistorian

Pro

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samadkins29

Con

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Debate Round No. 2
TheConsultingHistorian

Pro

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samadkins29

Con

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Debate Round No. 3
TheConsultingHistorian

Pro

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samadkins29

Con

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Debate Round No. 4
1 comment has been posted on this debate.
Posted by bkearney 3 years ago
bkearney
Who is supposed to regulate this? I am really opposed to regulations most times. Can't people take responsibility for their actions and live within their means?
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