A 10% Credit Card Rate Cap, Nixon’s Price Controls, and the Law of Unintended Consequences - Libertarian Party of California A 10% Credit Card Rate Cap, Nixon’s Price Controls, and the Law of Unintended Consequences - Libertarian Party of California Nixon-era wage and price controls are a reminder that price caps can create unintended consequences. When government caps prices, markets don’t cooperate — they adapt President Donald Trump has proposed capping credit card interest rates at 10% . The idea is politically appealing: credit card rates are high, consumer debt is rising, and many households are struggling. But history — and basic economics — suggest that price controls rarely deliver the outcomes politicians promise This proposal is a textbook example of the law of unintended consequences We’ve seen this before: Nixon’s wage and price controls In 1971, Republican President Richard Nixon imposed sweeping wage and price controls across the U.S. economy. The goal was to curb inflation and protect consumers. What followed was not stability, but predictable disruptions: Supply shortages Distorted markets Reduced investment Long-term inflationary pressure The controls temporarily hid inflation, but they broke the price signals that allow markets to function. When the controls were lifted, inflation surged again. Price controls didn’t fix the problem — they often delay and magnify it. Credit card rate caps follow the same pattern Capping credit card APRs at 10% doesn’t eliminate risk. It reallocates it In practice, hard caps tend to produce predictable outcomes: Lenders reduce access to credit for higher-risk borrowers Credit limits shrink Fees rise in other areas Consumers are pushed toward worse alternatives (including payday lending or informal debt) The credit market doesn’t disappear. It reshapes itself around the regulation — often leaving the most vulnerable consumers worse off. That’s the law of unintended consequences in action. Price controls are not free-market solutions Government-mandated price caps are not free-market policies. They are centralized economic control — no different in principle from rent control, wage controls, or energy price caps. Republicans once claimed to stand for limited government and market solutions. Nixon abandoned those principles in the 1970s. Today, similar thinking is returning — not just from Democrats, but from Republicans and others who claim to support markets until those markets become politically inconvenient. Why this matters to people who actually believe in limited government If you believe government should not set prices, and that economic freedom is inseparable from personal liberty, then neither major party consistently represents those values. One party favors regulation openly. The other embraces it selectively — while still claiming to oppose big government. That contradiction is exactly why the Libertarian Party exists. The libertarian answer isn’t flashy — but it works Libertarians don’t promise easy fixes. We recognize that incentives matter, that price controls distort markets, and that risk cannot be regulated out of existence. Freedom includes the freedom to make economic choices — and to live with the real-world consequences of policy decisions. Final thought A 10% credit card interest cap may sound compassionate, just as wage and price controls did in 1971. But good intentions do not repeal economic laws If you’re frustrated watching both major parties abandon limited government whenever it becomes inconvenient — and if you believe freedom should apply to markets as well as speech and personal choice — there is a political home that still takes those principles seriously. Join the Libertarian Party of California If you believe in limited government, free markets, and individual liberty — not just when it’s easy, but when it’s hard — we invite you to join us. Join the Libertarian Party of California (You’ll be taken to our secure Neon membership form.) JOIN DONATE TO CANDIDATES DONATE TO LPCA SHOP SUPPORT LPCA Manage Cookie Consent We use cookies to optimize our website and our service. Functional Always active The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network. Preferences The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user. Statistics The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you. Marketing The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes. Manage options Manage services Manage {vendor_count} vendors Read more about these purposes View preferences {title} {title} {title} Support the LPCA The LPCA is the Party of Principle The Libertarian Party fights for liberty because it hates injustice. Join Donate to Candidates Donate to LPCA