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Frank Merton

Debt

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Missing some obvious place to put this, I put it with science as economics officially is a science, at least according to the Nobel committee.

Debt is very much a two-edged sword. It is what gets individuals and nations and companies and so on into trouble, it is also what makes progress possible.

Without debt everyone putts along without serious pressures and does their thing. However, that's all they do. Debt is needed to grow, to do new things, to improve living standards and fight poverty.

A country running a surplus (such as Clinton experienced because of inflated stock values -- capital gains tax receipts) is bound to suffer collapse soon; deficits are necessary to keep growth going, families need debt to get a home and a car and an education, and so on.

But when debt becomes too large and unmanageable -- when the payments for the debt exceed the growth they bring about -- then of course there are defaults and the lenders get into trouble and collapse again ensues. The problem is that the money from the debt so often gets wasted in corruption or on the military rather than in building the economy. Individuals get into excessive debt because of excess luxury spending or gambling or other waste (or because of medical expenses, which in economic terms are wasteful).

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Frank, that "two-edged sword" is exactly what can kill you.

Massive debt leads to illogical desperation which often is not good.

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