More credit is a good thing
Federal Reserve Chairman Alan Greenspan said the success of financial services' industries in expanding credit availability has significantly helped the U.S. economy.
Credit cards encourage consumption because people tend to buy more with credit cards. This results in an increase in demand. More loans can further increase money supply, which results in an increase in demand as well. Demand increase will raise price level. Higher price encourages supply and will finally increase RGDP in U.S.
1 comment:
Yes, people do spend more money when they are given that tiny piece of plastic. Its like a golden ticket to spending money you dont have in the moment. However, these people are finding themselves more and more in debt. Eventually, this debt may fall on those following behind us. I think that EVENTUALLY... the credit card craze may put a damper on the GDP.. rather than put it through the roof.
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