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Simple solution: don't go into debt. If you must go into debt, make the debt in terms of hours worked or some other asset.

by jamoes 13y ago

betterunix 13y ago
That is a great way to establish an aristocracy, where only people who are already wealthy can ever start or maintain a business. What do you think venture capitalists are? They are creditors, whose loans enable people to start businesses they could not otherwise afford. Your great idea for disrupting some old entrenched industry will almost certainly need to be funded, and if you are not already wealthy that will mean taking on debt. Not only that, but there are plenty of people whose businesses need to take on short-term loans to remain competitive. Maybe your business is profitable but you do not have enough capital to fill a really big order -- which could be a great opportunity for your business to grow. If you are not going to take on any debt, then the really big order will be given to your competition, and eventually your business will fail. Debt is not universally bad; there are a lot of cases where debts make sense. Debt is bad when you cannot repay it, which is why deflation is bad.
- jamoes 13y ago
  I would argue that if the global economy operated on a fixed-supply currency, there would be no aristocracy. Those with the largest stash of currency would have to spend some of their wealth in order to realize its benefits. This spending would naturally result on a more even distribution of wealth. It also wouldn't be the end of debt - just the end of the ridiculous debt-for-life system that most people live like today.
  - betterunix 13y ago
    "I would argue that if the global economy operated on a fixed-supply currency, there would be no aristocracy. Those with the largest stash of currency would have to spend some of their wealth in order to realize its benefits. This spending would naturally result on a more even distribution of wealth." You are assuming that the richest people in the market would not have any income at all. I think that assumption is pretty dubious. Sure, they will spend some money; but all they would need to do is balance their budget, and they would remain rich perpetually since the currency has a fixed supply. In fact, if their income was larger than their spending, they would actually become wealthier over time, as they removed more and more money from the market and took advantage of deflationary effects.
waps 13y ago
Yes let's turn back the economy to the situation before 1940, when most normal people couldn't get credit. What could go wrong ? The GFC being the a chain reaction started by ~2% less borrowing you say ? Nah, that won't happen "this time". Like it or not, our economy is based on forgiving debt at the rate of inflation. And it's better than what came before. Can we please stop deluding everyone else ?

Simple solution: don't go into debt. If you must go into debt, make the debt in terms of hours worked or some other asset.

by jamoes 13y ago

Simple solution: don't go into debt. If you must go into debt, make the debt in terms of hours worked or some other asset.

betterunix 13y ago

That is a great way to establish an aristocracy, where only people who are already wealthy can ever start or maintain a business. What do you think venture capitalists are? They are creditors, whose loans enable people to start businesses they could not otherwise afford. Your great idea for disrupting some old entrenched industry will almost certainly need to be funded, and if you are not already wealthy that will mean taking on debt. Not only that, but there are plenty of people whose businesses need to take on short-term loans to remain competitive. Maybe your business is profitable but you do not have enough capital to fill a really big order -- which could be a great opportunity for your business to grow. If you are not going to take on any debt, then the really big order will be given to your competition, and eventually your business will fail. Debt is not universally bad; there are a lot of cases where debts make sense. Debt is bad when you cannot repay it, which is why deflation is bad.

jamoes 13y ago
I would argue that if the global economy operated on a fixed-supply currency, there would be no aristocracy. Those with the largest stash of currency would have to spend some of their wealth in order to realize its benefits. This spending would naturally result on a more even distribution of wealth. It also wouldn't be the end of debt - just the end of the ridiculous debt-for-life system that most people live like today.
- betterunix 13y ago
  "I would argue that if the global economy operated on a fixed-supply currency, there would be no aristocracy. Those with the largest stash of currency would have to spend some of their wealth in order to realize its benefits. This spending would naturally result on a more even distribution of wealth." You are assuming that the richest people in the market would not have any income at all. I think that assumption is pretty dubious. Sure, they will spend some money; but all they would need to do is balance their budget, and they would remain rich perpetually since the currency has a fixed supply. In fact, if their income was larger than their spending, they would actually become wealthier over time, as they removed more and more money from the market and took advantage of deflationary effects.

waps 13y ago

Yes let's turn back the economy to the situation before 1940, when most normal people couldn't get credit. What could go wrong ? The GFC being the a chain reaction started by ~2% less borrowing you say ? Nah, that won't happen "this time". Like it or not, our economy is based on forgiving debt at the rate of inflation. And it's better than what came before. Can we please stop deluding everyone else ?