A story from the UK shows one innovative strategy used by people in London to free others from debt; particularly payday debt.
Payday debt is a particularly pernicious short-term high-interest lending practice that preys on the poor and socially vulnerable.
In the UK, those who can't obtain credit elsewhere turn to high-street lenders for loans of sometimes £50 or £100.
While the Financial Conduct Authority restricts the maximum repayment to 200% of what was borrowed, where debts are repeatedly rolled over, this can rapidly spiral to astronomical levels. This can mean effective interest rates of more than 1000% a year.
While some lenders have been forced to write off debts due to their being unfairly or illegally issued, many people still find themselves in a spiral that's difficult to escape. When borrowers default, the debts are often sold to third parties whose business models rely upon buying the debt at a fraction of its face value and attempting to collect the full value plus administration costs. Their collection methods rely largely on intimidation and threats of legal action. Something I'll consider more in future posts.
One interesting project aims in part at alleviating these pressures, and is based around an art project. This particular art project involves the creation of bespoke artwork in the form of 'bank notes'.
The organisation behind it, Hoe Street Central Bank (HSCB, riffing off the Hong Kong Shanghai Bank, HSBC), sells these works of art, which feature members of the local community.
"HSCB is open in the former Co-Op Bank on Hoe Street in the London suburb of Walthamstow. Between 12th-25th March and 5th-23rd June 2018 it hosted intensive weeks of money printing and events and continues to be open as our production base and for bank note sales. "
Half of the proceeds go to a variety of charities while the other half are used to purchase payday debt on the secondary market at a fraction of its price and write it off, like Occupy activists famously did in 2013, spending $400,000 to write off $15 million in debt.
Those behind the HSCB project are informed by a wider understanding of the economic system, and the ways in which it is misrepresented; what they describe as "...the more basic, though illusory, idea that the national economy is like that of a household, and when times are tough, you need to cut.", noting that "It’s an idea that still holds sway in much of the public’s perception.".
More on this wider discussion in future.