According to Sen. Bernie Sanders, we need to punish banks and lenders because “zillions of people” don’t realize they must have good credit to avoid being be charged high interest rates on their credit cards.
On today’s show, we discussed self-described “Democratic Socialist” Bernie Sanders’ proposed Loan Shark Prevention Act, which calls on Congress to enact a 15% cap on all credit card interest rates. It’s the latest plank in the platform for democratic socialism.
This program, which is supported by fellow socialist Representative Alexandria Ocasio-Cortez, would place a cap on the interest rates that credit card companies are allowed to charge consumers.
In a joint-meeting with Rep. Ocasio-Cortez, streamed live on Facebook, Sen. Sanders announced:
“Today we’re telling Wall Street and the payday lenders that enough is enough. Your grotesque and disgusting behavior is not acceptable in America, and we’re going to change it.”
Sanders and Rep. Ocasio-Cortez want us all to think they’re standing up for the little guy and taking on “these guys in three-piece suits, who are the new loan sharks and hoodlums” that in the old days would “break your kneecap.”
Sure, it sounds like a good thing at first glance.
But we agreed that if you look a little deeper, it is a dangerous idea. What they’re suggesting is just more socialist control. The reason we have access to so much credit in this country is because creditors are able to price their products appropriately for the risk they are assuming.
The default risk that credit card companies take on is very high. Unfortunately, the amount of people who open credit cards, charge them up, and never pay them back is staggering. In fact, consumer debt in America is at an all-time high. Creditors have to charge interest to offset the loss they take when others default. The only alternative is a reduction in the number of Americans who will have access to credit at all.
The Sanders plan would likely cause access to credit to dry up for millions of Americans.
Another component of Sen. Sander’s plan is to run banking services through the postal service. In other words, he wants the government to deliver the mail and run our banking system through a single federal entity. It’s a recipe for disaster.
Democratic socialism doesn’t really look out for the working man and woman. Rather, these ideas just seek to control the banks and creditors in this nation—which ultimately centralizes control over your money, as well. By digging past the headlines, voters can understand the true impact of these dangerous policies.
You can listen to the entire episode here.
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