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Debt is a distributional issue. It nets down to zero as for each debtor there must be a creditor.

That's the NCE view.  

Looking at it Dynamically, debt has Opportunity Cost(s) for the debtor since they have to make the interest payments.  This reduces the amount of money they could spend on other things.  Compound interest really socks it to the debtor as the stream-of-payments amounts to as much as 300% of the initial borrowing.  

It wouldn't be so bad if this was recycled and circulated in the micro-economy.  What happens is the lender takes the payments and loans it out again, creating compounding on compounding, creating a parasite/host predatory economic environmental relationship.  

If the predation is not restricted the economy wanders to the right side of this:

graph and Things Fall Apart.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sun Oct 30th, 2011 at 02:24:28 PM EST
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