9 ms·

Sadly, this proves that the economy is ultimately run on debt. Someday, maybe we, as a society, will realize that debt, credit, and lending is the way bankers

Sadly, this proves that the economy is ultimately run on debt. Someday, maybe we, as a society, will realize that debt, credit, and lending is the way bankers scam money out of everyone else, and we collectively won't put up with it anymore. Banks often have some of the biggest and shiniest towers in downtowns all around the world. How did they get them? Interest, fees, and charges. I can't count how many times people (even on this very site!) have said something like "don't buy things with cash, invest it and get a loan for it instead because interest." It's no mystery as to why you don't have a tower, because you're paying for someone else's. Normal people figured this out such a long time ago, that a verse in the Bible says that the borrower is slave to the lender. I'm no slave. And don't be fooled by the cash and airline miles that your credit card throws at you. You're paying for those "rewards" by fees that the banks and networks charge merchants, and they're ultimately built into increased prices that everyone pays. No one got rich from those crumbs, except the bankers.

SketchySeaBeast 4y ago
Unfortunately debt is a part of our society. How would any business that requires a large capital investment start if not for debt? Taking on smart debt and making money off it is a way to better one's own situation. Without the ability to take on debt our social classes would stratify into the haves and have nots even greater than it is today. I don't like debt, and it has truly gotten crazy, but I don't know a way around debt.
- bombcar 4y ago
  Debt isn’t the problem - it’s what happens when you can’t pay the debtor. Personal recourse debt is a scourge on the world, especially the poor.
rozap 4y ago
Except that you only live once. If I can buy a house with a mortgage and live in my own place for years of my finite existence versus trying to save money while paying for someone else's mortgage and living in a basement, what seems more rational? You only have a few dozen years left. It's no utopia, but it works well enough.
- Gumbercules 4y ago
- ejb999 4y ago
  taking on debt for an appreciating (or incoming earning) asset, is generally OK - taking on debt for a depreciating asset is never a good idea if you can avoid it. Taking on debt to pay your daily living expenses is a recipe for disaster - and that is what the US govt. has been doing (and many individuals as well)
  - SketchySeaBeast 4y ago
    > taking on debt for a depreciating asset is never a good idea if you can avoid it. Even that isn't necessarily true - if one is broke but one needs a car for a better job they need to take on debt for the car. The debt definitely isn't an appreciating or incoming earning asset, but it is a good choice.
    - ejb999 4y ago
      thus the "if you can avoid it" part of my answer.
  - jrwoodruff 4y ago
    Yea but the US Government isn't a person. It's repayment timespan is, in theory, infinite. And inflation actually devalues any debt the government holds, making it easier to 'pay back.' Unpopular opinion, and maybe I'm wrong here and I've just been lucky, but I've stopped seeing debt as a bad thing. You have to use it smartly of course, but I don't think there's a one-size-fits-all answer for what that means. Use it for daily living expenses? Sure, as long as you can pay it off every month. Never take out a loan and spend years saving for a car? Nah, or at least not when that interest rate was 2-3%. And I suppose that's where increasing interest rates come in: Get the 99% to stop buying.
    - monlockandkey 4y ago
cercatrova 4y ago
> Sadly, this proves that the economy is ultimately run on debt. All economies are run on debt [0] [0] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
- jrwoodruff 4y ago
  I'm reading the book right now, it's a really interesting read.
- Proven 4y ago
  [dead]
- waynesonfire 4y ago
  Does this mean for me to be successful I have to take in debt? It is scary... or, do I create a Corp and isolate myself from that risk?
RspecMAuthortah 4y ago
That is the reason why all the monotheistic religions had fatwa on debt. And you can see how countries that are further moving away from the religious values at different points in histories also immediately adopt a debt based economy.
- deleted 4y ago
  [deleted]
aclatuts 4y ago
I use to think this too, but now I believe debt and interest is right up there with energy in terms of economic growth. Without debt, economic growth nearly zero sum. Waiting for the money to exist and then spending it is just slow and inefficient most of the time. Show me a country that is under-banked and has little access to loans and I will show you a poor country.
- BuckRogers 4y ago
  Yup. I too used to think the same way as the GP. But then I realized that most of society’s advancements in the west started with two things. Technological advancements, and fiat currency. No one takes any risks when you’re risking a finite resource like gold. And having that money available has been put the great use for technological advancements that pay everyone back down the road. If, and when the system collapses, who cares? Advancements gained through technology will be with us.
- monlockandkey 4y ago
  Usurious debt enables explosive economic growth, no question about that. However in my opinion it is more just to have an economy that steadily grows over time rather than a boom and bust cycle which causes horrendous and frankly distressing situations to a large part of the most vulnerable people in society. Heck, even the middle class is affected as quality of life goes down as well.
scotuswroteus 4y ago
"Someday, maybe we, as a society, will realize" is one of those sentences that never delivers what it promises. It's always some cockamamie partisan hack job oversimplified nonsense that calls for wholesale revisions of the entire system based on one semiserious concern.
monlockandkey 4y ago
This is why interest is harshly condemned in Islam. One of the major major sins with servere punishment. Is it an evil which keeps the rich richer and the poor poorer (and miserable). Islamic finance is the solution to a balanced and fair economy. 1. It prohibit interest to outlaw debt based exploitation and instead replaces it with loans of generosity (pay back exact amount, no interest ) or fund raising through investment. Whereby the risk of the person receiving investment is shared with the lender. This is in contrast with a conventional loan where if your property or business burns down, you still have to pay off the loan to the bank. 2. Zakat - a wealth tax on every Muslim. The value of 2.5% of cash, stocks, investment each year is given to the most needy of society. Implement these systems and you will have a just economy that prevents hoarding and exploitation. Literally money is forced to move down societal class and acquiring more wealth is with increased risk. Islamic finance is the solution.
- Lionga 4y ago
  Which country is poster child for your Islamic finance? Turkey? Sri Lanka? Or Quatar?
  - monlockandkey 4y ago
    None. There is no Muslim majority country on Earth at this moment which fully abides by Sharia. There are some Islamic laws here and there mixed with secular rulings. As such Muslim countries of today unfortunately engage with interest. The thing with interest, there is very little in terms of going back. As mentioned in this thread the entire modern global economy is built on usurious financial instruments. This was not really the case a few hundred years ago where the level and extent of debt was not to the extremes of today. Abu Huraira reported: The Messenger of Allah, peace and blessings be upon him, said, “A time will come upon people in which they will consume usury.” It was said, “All of the people?” The Prophet said, “Whoever does not consume it will be affected by its dust.” Source: Musnad Aḥmad 10191 Grade: Sahih (authentic) according to Ahmad Shaki
    - pixl97 4y ago
sfvegandude 4y ago
There's nothing intrinsically wrong with debt. It just needs to be handled (regulated) appropriately -- no easy task, to be sure -- but consider that debt is traditionally what has enabled people with good ideas to make big bets that paid off for both them and their employees. Most small businesses (most of Americans work for small business) are founded on debt.
lossolo 4y ago
I think the problem is not the debt, because credit allows for growth to people that don't have enough capital. Maybe problem here is the source of this money, now banks basically create money from nothing, so you can pump a lot of empty money into economy that was not created by being productive. Before that you basically were lending to someone else what you earned yourself.
incomingpain 4y ago
>Sadly, this proves that the economy is ultimately run on debt. Its much worse than that. Without a 'gold standard' or really any standard. Money = debt. For anyone to have any money, others have to have debt. For 50 million retirees to have millions of $ means there is more than that of people in debt. For a politician to 'forgive debt' means the value must come from someone else, primarily retirees. >Someday, maybe we, as a society, will realize that debt, credit, and lending is the way bankers scam money out of everyone else, and we collectively won't put up with it anymore. That's kind of the problem. Lets say we won't put up with it anymore. It ends. No more debt akin to many other empires in antiquity. How do we go about it? Mainly you want to adjust the fractional bank ratio and reserves. Currently 13% or so depending on lots of factors. So has anyone tried this? Moldova post-USSR has been trying this. It basically destroyed their economy. They never got there, they were close to 2:1 which is crazy good but it ended up just stagnating and wrecking them. Yes lots of confounders here but imagine you can't take on debt. You never have a mortgage. You must buy cash. Guess you're starting to work very early to save enough money to move out of your parents home? homes wont be a good bet neither, without mortgages. Safe investments in retirement funds have to be attracted elsewhere. House prices will be constantly pressured downward but suppliers and construction people want to get paid. >How did they get them? Interest, fees, and charges. I can't count how many times people (even on this very site!) have said something like "don't buy things with cash, invest it and get a loan for it instead because interest." It's no mystery as to why you don't have a tower, because you're paying for someone else's. They take their cut of the transaction and take no risks or liabilities on. Smart business. >Normal people figured this out such a long time ago, that a verse in the Bible says that the borrower is slave to the lender. I'm no slave. Without debt though, how do you live in a house? You rent? Rent is about the same price as the mortgage. You're paying someone else tower as it were. You should virtually never rent. It's interesting how the whole system is designed around debt and yet there's only 1 proposed system that might fix this. Social credit. https://en.wikipedia.org/wiki/Social_credit https://en.wikipedia.org/wiki/Social_credit

SketchySeaBeast 4y ago

Unfortunately debt is a part of our society. How would any business that requires a large capital investment start if not for debt? Taking on smart debt and making money off it is a way to better one's own situation. Without the ability to take on debt our social classes would stratify into the haves and have nots even greater than it is today. I don't like debt, and it has truly gotten crazy, but I don't know a way around debt.

bombcar 4y ago
Debt isn’t the problem - it’s what happens when you can’t pay the debtor. Personal recourse debt is a scourge on the world, especially the poor.

rozap 4y ago

Except that you only live once. If I can buy a house with a mortgage and live in my own place for years of my finite existence versus trying to save money while paying for someone else's mortgage and living in a basement, what seems more rational? You only have a few dozen years left. It's no utopia, but it works well enough.

Gumbercules 4y ago
ejb999 4y ago
taking on debt for an appreciating (or incoming earning) asset, is generally OK - taking on debt for a depreciating asset is never a good idea if you can avoid it. Taking on debt to pay your daily living expenses is a recipe for disaster - and that is what the US govt. has been doing (and many individuals as well)
- SketchySeaBeast 4y ago
  > taking on debt for a depreciating asset is never a good idea if you can avoid it. Even that isn't necessarily true - if one is broke but one needs a car for a better job they need to take on debt for the car. The debt definitely isn't an appreciating or incoming earning asset, but it is a good choice.
  - ejb999 4y ago
    thus the "if you can avoid it" part of my answer.
- jrwoodruff 4y ago
  Yea but the US Government isn't a person. It's repayment timespan is, in theory, infinite. And inflation actually devalues any debt the government holds, making it easier to 'pay back.' Unpopular opinion, and maybe I'm wrong here and I've just been lucky, but I've stopped seeing debt as a bad thing. You have to use it smartly of course, but I don't think there's a one-size-fits-all answer for what that means. Use it for daily living expenses? Sure, as long as you can pay it off every month. Never take out a loan and spend years saving for a car? Nah, or at least not when that interest rate was 2-3%. And I suppose that's where increasing interest rates come in: Get the 99% to stop buying.
  - monlockandkey 4y ago

cercatrova 4y ago

> Sadly, this proves that the economy is ultimately run on debt. All economies are run on debt [0] [0] https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

jrwoodruff 4y ago
I'm reading the book right now, it's a really interesting read.
Proven 4y ago
[dead]
waynesonfire 4y ago
Does this mean for me to be successful I have to take in debt? It is scary... or, do I create a Corp and isolate myself from that risk?

RspecMAuthortah 4y ago

That is the reason why all the monotheistic religions had fatwa on debt. And you can see how countries that are further moving away from the religious values at different points in histories also immediately adopt a debt based economy.

deleted 4y ago
[deleted]

aclatuts 4y ago

I use to think this too, but now I believe debt and interest is right up there with energy in terms of economic growth. Without debt, economic growth nearly zero sum. Waiting for the money to exist and then spending it is just slow and inefficient most of the time. Show me a country that is under-banked and has little access to loans and I will show you a poor country.

BuckRogers 4y ago
Yup. I too used to think the same way as the GP. But then I realized that most of society’s advancements in the west started with two things. Technological advancements, and fiat currency. No one takes any risks when you’re risking a finite resource like gold. And having that money available has been put the great use for technological advancements that pay everyone back down the road. If, and when the system collapses, who cares? Advancements gained through technology will be with us.
monlockandkey 4y ago
Usurious debt enables explosive economic growth, no question about that. However in my opinion it is more just to have an economy that steadily grows over time rather than a boom and bust cycle which causes horrendous and frankly distressing situations to a large part of the most vulnerable people in society. Heck, even the middle class is affected as quality of life goes down as well.

scotuswroteus 4y ago

"Someday, maybe we, as a society, will realize" is one of those sentences that never delivers what it promises. It's always some cockamamie partisan hack job oversimplified nonsense that calls for wholesale revisions of the entire system based on one semiserious concern.

monlockandkey 4y ago

This is why interest is harshly condemned in Islam. One of the major major sins with servere punishment. Is it an evil which keeps the rich richer and the poor poorer (and miserable). Islamic finance is the solution to a balanced and fair economy. 1. It prohibit interest to outlaw debt based exploitation and instead replaces it with loans of generosity (pay back exact amount, no interest ) or fund raising through investment. Whereby the risk of the person receiving investment is shared with the lender. This is in contrast with a conventional loan where if your property or business burns down, you still have to pay off the loan to the bank. 2. Zakat - a wealth tax on every Muslim. The value of 2.5% of cash, stocks, investment each year is given to the most needy of society. Implement these systems and you will have a just economy that prevents hoarding and exploitation. Literally money is forced to move down societal class and acquiring more wealth is with increased risk. Islamic finance is the solution.

Lionga 4y ago
Which country is poster child for your Islamic finance? Turkey? Sri Lanka? Or Quatar?
- monlockandkey 4y ago
  None. There is no Muslim majority country on Earth at this moment which fully abides by Sharia. There are some Islamic laws here and there mixed with secular rulings. As such Muslim countries of today unfortunately engage with interest. The thing with interest, there is very little in terms of going back. As mentioned in this thread the entire modern global economy is built on usurious financial instruments. This was not really the case a few hundred years ago where the level and extent of debt was not to the extremes of today. Abu Huraira reported: The Messenger of Allah, peace and blessings be upon him, said, “A time will come upon people in which they will consume usury.” It was said, “All of the people?” The Prophet said, “Whoever does not consume it will be affected by its dust.” Source: Musnad Aḥmad 10191 Grade: Sahih (authentic) according to Ahmad Shaki
  - pixl97 4y ago

sfvegandude 4y ago

There's nothing intrinsically wrong with debt. It just needs to be handled (regulated) appropriately -- no easy task, to be sure -- but consider that debt is traditionally what has enabled people with good ideas to make big bets that paid off for both them and their employees. Most small businesses (most of Americans work for small business) are founded on debt.

lossolo 4y ago

I think the problem is not the debt, because credit allows for growth to people that don't have enough capital. Maybe problem here is the source of this money, now banks basically create money from nothing, so you can pump a lot of empty money into economy that was not created by being productive. Before that you basically were lending to someone else what you earned yourself.

incomingpain 4y ago

>Sadly, this proves that the economy is ultimately run on debt. Its much worse than that. Without a 'gold standard' or really any standard. Money = debt. For anyone to have any money, others have to have debt. For 50 million retirees to have millions of $ means there is more than that of people in debt. For a politician to 'forgive debt' means the value must come from someone else, primarily retirees. >Someday, maybe we, as a society, will realize that debt, credit, and lending is the way bankers scam money out of everyone else, and we collectively won't put up with it anymore. That's kind of the problem. Lets say we won't put up with it anymore. It ends. No more debt akin to many other empires in antiquity. How do we go about it? Mainly you want to adjust the fractional bank ratio and reserves. Currently 13% or so depending on lots of factors. So has anyone tried this? Moldova post-USSR has been trying this. It basically destroyed their economy. They never got there, they were close to 2:1 which is crazy good but it ended up just stagnating and wrecking them. Yes lots of confounders here but imagine you can't take on debt. You never have a mortgage. You must buy cash. Guess you're starting to work very early to save enough money to move out of your parents home? homes wont be a good bet neither, without mortgages. Safe investments in retirement funds have to be attracted elsewhere. House prices will be constantly pressured downward but suppliers and construction people want to get paid. >How did they get them? Interest, fees, and charges. I can't count how many times people (even on this very site!) have said something like "don't buy things with cash, invest it and get a loan for it instead because interest." It's no mystery as to why you don't have a tower, because you're paying for someone else's. They take their cut of the transaction and take no risks or liabilities on. Smart business. >Normal people figured this out such a long time ago, that a verse in the Bible says that the borrower is slave to the lender. I'm no slave. Without debt though, how do you live in a house? You rent? Rent is about the same price as the mortgage. You're paying someone else tower as it were. You should virtually never rent. It's interesting how the whole system is designed around debt and yet there's only 1 proposed system that might fix this. Social credit. https://en.wikipedia.org/wiki/Social_credit https://en.wikipedia.org/wiki/Social_credit