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The key point is that most of the people "borrowing money" have the means to pay cash but choose not to. It is a question of how they could pay, not if they cou

The key point is that most of the people "borrowing money" have the means to pay cash but choose not to. It is a question of how they could pay, not if they could pay. I borrow money all the time when I could easily pay cash. Credit is more convenient and doesn't cost me anything. Similarly, I have a car loan even though I could have paid cash for the car. It is sensible finance.

sumtechguy 6y ago
borrowing money right now to buy something is not a bad idea... (i think) If they have just printed a ton of cash (they did) that means at some point it will correct. Meaning you in the long term might beat the interest rate if inflation gets higher than that. just an idea.
bombcar 6y ago
“How would I pay a $400 bill” will always be “charge it” unless there’s a cost associated- getting a check or cash from the bank is a hassle.
edoceo 6y ago
a loan (with interest?), on a depreciating "asset", which obligates higher risk-premium (ie:insurance) does not seem sensible to me (and never has when I run the numbers).
- jandrewrogers 6y ago
  It absolutely makes sense as a matter of elementary finance to use a loan when interest rates are low rather than paying cash -- I was buying a car regardless. The interest rate on the loan is far below my average rate of return investing the same amount of cash. The profit on the invested cash exceeds the loss from loan interest; I get to keep the remainder. Similarly, I put all of my daily expenses on credit. I pay off all of that credit at the end of the month. I am still borrowing money but I am paying no interest on it.
  - thekyle 6y ago
    What did you invest the cash in? Corporate bonds?
    - jandrewrogers 6y ago
      No, bonds are a poor investment right now. I generally invest in equities.
      - thekyle 6y ago
        Well that is an interesting strategy. Seems kind of high risk, high reward since equities could crash and not recover before your loan is due.

sumtechguy 6y ago

borrowing money right now to buy something is not a bad idea... (i think) If they have just printed a ton of cash (they did) that means at some point it will correct. Meaning you in the long term might beat the interest rate if inflation gets higher than that. just an idea.

bombcar 6y ago

“How would I pay a $400 bill” will always be “charge it” unless there’s a cost associated- getting a check or cash from the bank is a hassle.

edoceo 6y ago

a loan (with interest?), on a depreciating "asset", which obligates higher risk-premium (ie:insurance) does not seem sensible to me (and never has when I run the numbers).

jandrewrogers 6y ago
It absolutely makes sense as a matter of elementary finance to use a loan when interest rates are low rather than paying cash -- I was buying a car regardless. The interest rate on the loan is far below my average rate of return investing the same amount of cash. The profit on the invested cash exceeds the loss from loan interest; I get to keep the remainder. Similarly, I put all of my daily expenses on credit. I pay off all of that credit at the end of the month. I am still borrowing money but I am paying no interest on it.
- thekyle 6y ago
  What did you invest the cash in? Corporate bonds?
  - jandrewrogers 6y ago
    No, bonds are a poor investment right now. I generally invest in equities.
    - thekyle 6y ago
      Well that is an interesting strategy. Seems kind of high risk, high reward since equities could crash and not recover before your loan is due.