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It's good for regular people too. Debt is a great thing to have in an inflationary economy, especially long term debt backed by an asset, like a home. In essenc

It's good for regular people too. Debt is a great thing to have in an inflationary economy, especially long term debt backed by an asset, like a home. In essence, we inflate debt away over time. In a deflationary economy debt is crippling and because we are a debt based economy we have a deadly fear of deflation and will do anything to prevent it. Hence why they desperately inflated the economy during Covid. The alternative (do nothing) would have resulted in massive deflationary pressure and would have been devastating for debt holders.

immibis 3y ago
Forcing regular people to take out huge debt is not good for them.
- nemo44x 3y ago
  Sure it is, especially when the interest rate is less than the inflation rate. But even when not, over a long enough period a fixed rate will be eclipsed by inflation making the actual cost of the debt significantly less. This is great as you’re holding an asset worth far more than what you owe and it can be used to finance more debt if you wish. Some people take on too much debt. But overall asset backed debt is a great system that lets people build wealth.
  - poorlyknit 3y ago
    Except that you're not allowed to take out a mortgage and denied credit if you're poor, which means you're stuck spending your money for necessities and therefore being poor. The system works great for people who (or whose family, circle, etc.) are already not poor.
  - immibis 3y ago
    I don't see any world where forcing people to take on massive debt is good for them - the mere suggestion that it could be feels like gaslighting - and the contrived situation you described barely qualifies as debt, but is more like free money from the government - financial institutions do not lend out money for less than inflation unless the government pushes them to. Debt less than inflation is not free money unless you can put it in a savings account which pays more than inflation. This is very rarely possible, because the institution lending you the money would just put it in that same account instead of lending it to you. It's quite the opposite of free money - it forces you to work to acquire the greater number of nominal dollars which you'll need to repay in the future. The argument for taking out debt with interest lower than inflation is that you can time-shift your purchases and end up doing less work to buy the same stuff in the long run. If you aren't doing that (which is a gamble, btw), then you shouldn't have the debt.

immibis 3y ago

Forcing regular people to take out huge debt is not good for them.

nemo44x 3y ago
Sure it is, especially when the interest rate is less than the inflation rate. But even when not, over a long enough period a fixed rate will be eclipsed by inflation making the actual cost of the debt significantly less. This is great as you’re holding an asset worth far more than what you owe and it can be used to finance more debt if you wish. Some people take on too much debt. But overall asset backed debt is a great system that lets people build wealth.
- poorlyknit 3y ago
  Except that you're not allowed to take out a mortgage and denied credit if you're poor, which means you're stuck spending your money for necessities and therefore being poor. The system works great for people who (or whose family, circle, etc.) are already not poor.
- immibis 3y ago
  I don't see any world where forcing people to take on massive debt is good for them - the mere suggestion that it could be feels like gaslighting - and the contrived situation you described barely qualifies as debt, but is more like free money from the government - financial institutions do not lend out money for less than inflation unless the government pushes them to. Debt less than inflation is not free money unless you can put it in a savings account which pays more than inflation. This is very rarely possible, because the institution lending you the money would just put it in that same account instead of lending it to you. It's quite the opposite of free money - it forces you to work to acquire the greater number of nominal dollars which you'll need to repay in the future. The argument for taking out debt with interest lower than inflation is that you can time-shift your purchases and end up doing less work to buy the same stuff in the long run. If you aren't doing that (which is a gamble, btw), then you shouldn't have the debt.