Recall how financial regulators during the Obama Presidency pressured banks to cut off credit to pay-day lenders.
That actually needed to be done. Pay-day lending is government sanctioned extortion of the financially illiterate. Once you get up to 36% APR you're basically back to 1920's style protection rackets.
At a conceptual level, taxes and lotteries won't take you below zero. There are some enormous caveats to that statement of course.
But credit cards and payday loans let you hit bottom and keep digging. Credit cards are exploitative enough, but once a person gets to the point of payday loans they are literally BETTER OFF hitting bottom and being forced to file bankruptcy rather than continuing to enable bad spending.
That actually needed to be done. Pay-day lending is government sanctioned extortion of the financially illiterate. Once you get up to 36% APR you're basically back to 1920's style protection rackets.
There's a slight difference.
At a conceptual level, taxes and lotteries won't take you below zero. There are some enormous caveats to that statement of course.
But credit cards and payday loans let you hit bottom and keep digging. Credit cards are exploitative enough, but once a person gets to the point of payday loans they are literally BETTER OFF hitting bottom and being forced to file bankruptcy rather than continuing to enable bad spending.