Credit Check

Bridget, you raise some good questions, but ones that seem to stem from a lack of economic understanding.

Indeed, Bridget, if a person has no revenue and no savings left, his/her options are to make purchases on credit or seek charity from others (we're assuming here, that he/she is not the recipient of unemployment insurance, severance pay, or welfare). If a person is to make a purchase on credit, it is up to him/her to decide whether or not it is worth paying back on the designated interest rate.

The rate of interest is the value placed on goods today versus goods in the future. Credit card companies have not raised their interest rates in an attempt to prey on certain people's need for money. Credit card companies, like many others in today's economy, are struggling to make their payments and meet their debt obligations. They are currently in the process of renogotiating interest rates with many of their customers on the basis that many are struggling to pay them back and, at this point, they need to worry more about recouping their loans. Remember, credit card companies compete with each other. All else remaining equal, it would not make sense for a credit card company to suddenly increase its rates, because competing credit card companies would swoop in to steal its market share by providing lower rates. The reason that credit card companies have increased their rates is because they don't have a lot to lend right now.

High interest rates are disincentives for buying on credit, which means people have more of a tendency to reserve their use of credit for when they think it is really "worth it." It incentivizes resourceful spending, savings, and capital formation. Lowering these rates by political edict will only create more economic turmoil in the form of bubble malinvestment and eventually credit shortages. Price controls almost always lead to shortages and malinvestment, and price controls on money are no exception. We already have a corrupt, price-controlled monetary system in the form of the Federal Reserve. The last thing we need is more of the same.

I am also compelled to point out the inherent immorality and violence of what you are advocating. Essentially, you are advocating the use of force against other individuals to make decisions as you see fit. Although I think your intentions are good, Bridget, I frankly see your advocacy as fascistic and not a constructive meme toward a sustainable society. Imagine if other people forced you to offer your labor at a certain price.

...but I will try to answer it, generally.

First, I would like to note that it is not my view that you are "perpetuating the vicious cycle of violence" by "[contacting your] lawmakers about doing something about anything." You are only perpetuating that violence if you contact your lawmakers about doing something that regulates other people's freedoms beyond non-contractual intrusions or damages to other people or property. In other words, there's a big difference between the government saying to a fertilizer company, "you're not allowed to fertilize Ms. Algiere's lawn without her consent" and saying,  "you're not allowed to use this fertilizer that Ms. Algiere's wants you to use on her lawn."

If you want to focus on reformation of law and, thus, the economic system as a whole, then hooray! But not by adovcating for more robust and aggressive legislation. Instead of focusing on symptoms, focus on getting rid of the disease.

You could try to get a lot of violence that's in place repealed (a lot of violence that directly led to the current economic crisis) and attempt to halt legislation that is delaying economic recovery. For example, you could advocate against the bailouts and enormous spending bills that are leading to a long-lasting depression and the eventual destruction of the dollar. You could advocate against fractional reserve banking, restrictions on creating independent currencies, the Federal Reserve, the FDIC, the SEC, Sarbanes-Oxley, GSEs like Fannie Mae and Freddie Mac, HUD, the CRA, the Equal Credit Opportunity Act, and "pro-ownership" tax codes, all of which have played tremendous roles in distorting the market and creating our current crisis.

Getting rid of this violence in the system is paramount in allowing for a more equitable, healthy, and sustainable economy, which, in the long run, is going to be the biggest boon for others. So if you want the government to do something to help, you might want to get it to start by stopping at least some of those operations.

So, what else can you do? Well, I don't know you, and I don't know what your skills, social relations, professional connections, financial health, or other resources are that you have available to you, but I can't imagine there's some way in which you can't put them to use to help out those who are struggling. Donate money, or food, or supplies. Rally others to do the same. Maybe you loan your own money at 0% interest. Maybe you create an online community to register/recognize families in trouble and syphon resources to them. Maybe you join in efforts that have already coalesced. Maybe you develop an outreach program to help those whose jobs have been revealed obsolete after the crash retrain for work that is in higher demand. Maybe you have friends or acquaintences who have more resources at their disposal than you do, and you can persuade them to devote resources to your cause. Maybe you're struggling yourself and your priorities are set on your career, leaving little time to devote to others, in which case maybe you could convince people in a more flexible situation than you to adopt your goals. 

What you individually contribute is limited only by your own resources, aspirations, priorities, and imagination. Unless used as a defense against the forceful and uncompromising pursuits of others in violation of person and/or property, violence is never a "viable alternative." Violence begets violence. Violence is lazy. Violence is not and cannot ever be an answer to social problems.

I hope you see at least some of what I've mentioned as an alternative to simply getting lawmakers to force credit card companies to lower their interest rates. Thanks for your curiosity.