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> Lending money to a business is essentially the same as investing in it anyway. They’re very clearly not the same, debt and equity are separate things that se
by quickthrowman 3y ago
> Lending money to a business is essentially the same as investing in it anyway.
They’re very clearly not the same, debt and equity are separate things that serve different purposes. And yes, I am aware of convertible bonds and other forms of combined debt/equity instruments.
Debt is senior to equity in bankruptcy filings. A troubled company will pay its lenders and bondholders before paying dividends to its equity investors.
There has always been debt, society can’t function without it. “Lend me seeds now so that I may grow a crop and pay you back at harvest time” is a form of debt that has been around as long or nearly as long as agriculture has.
- nocoiner 3y agoGive him a break, he’s in the middle of re-discovering Modigliani-Miller, except with a dash of crypto-optimism and pro-indentured servitude (??) thrown in.
- willmadden 3y agoYou're arguing from today's legal framework. I'm not interested in today's legal framework. My point is debt doesn't need to exist and we could operate more efficiently using a currency with a pre-defined supply with efficient equity markets.
- quickthrowman 3y agoPlease read the book ‘Debt: The First 5,000 Years’ and then re-examine your ideas about not needing debt. I think you’ll find that we do in fact need debt to function as a society. A currency with a pre-defined supply is a non-starter, there are multiple academic papers you can find that will tell you exactly why.