Do you think charging interest has caused our housing market bust? Why do some govts not charge interest?

Question

Is interest necessary for the economy?

Answer 1

Yes, it's necessary to charge interest. That IS the price of money and lenders wouldn't lend money without that revenue incentive.

And no, I do not think that charging interest caused our housing market bust. The housing market, like any other, goes through cycles of booms and busts. Before this one, there was a housing market crash in 1989/1990. The market bust simply because it went as high as it possibly could given the fundamentals underlying purchases.

Answer 2

Yes, it is necessary to charge interest. How else would banks and mortgage companies make the money they need to operate?