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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: RetiredNow who wrote (260652)7/14/2010 10:24:08 AM
From: neolibRead Replies (2) of 306849
 
While I generally agree with your post, this theme runs through it:

Those borrowing represent fake, or inorganic, growth that is pulled from the future to the present to prop up GDP.

Imagine if this logic were applied to every startup business, namely that it should not borrow, but should self fund to get going. Does it make sense then?

The boundaries of the economic entity being discussed are not the issue. It could be one person, a corporation, a sector of the economy, or the entire economy. Borrowing & debt are not always bad. The more important issue is what you are borrowing for. If it bootstraps productivity, it can be a very good thing. Thats what VC money and tech startups are all about. If the borrowing is to fund living beyond your means ala the HELOC ATM mindset of "home owners" of recent years, thats not so good. Same goes for much government spending.
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