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> For debt ratios to decline, people have to stop going into debt as much. Low interest rates and high perceived inflation causes people to take on increasingl
by webinvest 6y ago
> For debt ratios to decline, people have to stop going into debt as much.
Low interest rates and high perceived inflation causes people to take on increasingly higher amounts of debt. In some cases, it makes sense to borrow at 3-8% interest if you expect an ROI of 12-20% and you set aside 1/3rd of your gross return for taxes.
However this system has some positive effects. If you go out and build 3 homes and people buy them, you’ve effectively created 3 homes worth of wealth.