hases will reduce the rate of economic growth. In an effort to further clarify a subheading anything that you can to do that will increase borrowing for consumption, and anything that you could do to encourage people to borrow for consumption purposes. Now suppose you really wanted to do that one really good way might be to give people a tax break on the funds that they borrow for consumption we could let them say deduct the interest they pay on there consumer debt. Now up until fairly recently in fact you could do that with credit card interest run up a huge credit card bill the interest was horrifying on credit cards but all the interest payments you paid on your credit card installment debt were deductible from your taxable income. So you got a little plus going along with that debt. Now that has been eliminated and that is one small step in the right direction but there is still a huge factor that is still working in a huge way. That is called mortgage interest. You can deduct all the interest you pay on your mortgage from your taxable income. A house is a consumer good it’s not a part of the economies productive capacity, and by this tax deduction for the interest you pay on your mortgage debt the government encourages people to incur that debt, and increases the demand for the particular type of consumption item. All of the labor, and the materials that go to build houses lumber, bricks, motor, concrete, pipes, all of it, that labor could all be used to add productive capacity in the economy instead it is being used to build houses. Now is that necessarily terrible? No it’s not necessarily terrible. But it does reduce the rate of economic growth. Another move in this direction the opposite not a plus is you reduce the penalties for bankruptcy. In the last five years the laws past significantly reduce the penalties for bankruptcy. So you declare yourself bankrupt you can keep your house, car, furniture, pool, and, the o...
