Debt does not assume tomorrow will be better.

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Dr.Steve's picture
Dr.Steve
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Debt does not assume tomorrow will be better.

I agree with everything in this chapter, however there is one assertion which may not be correct. Perhaps Chris can elaborate -?

I totally agree that debt is a loan from the future. However, the assertion that debt assumes the future will be better (Chris also uses "bigger") than the present does not always seem to be true. It may often be true, but that doesn't make it a "law" unless it's always true.

An actual example: I have four slices of bread for today and tomorrow. Rationally, I would have two slices today and save two for tomorrow. However, in practice I eat all four today knowing full well I am going to go hungry tomorrow and regret today's decision. Yet, I just want four slices of bread today, and figure I can bear the discomfort tomorrow. So that is what I do. A drinker may make the same sort of rationalization. In these cases, one knows full well that tomorrow we will be less off than today, yet we persist. In the economic realm, a person spends all their money today -knowing tomorrow they will be worse off. I think the fear of inflation makes us think "use it or loose it" and spend it all today -that's what I did. Some say to get out of debt, but I conclude the opposite. If you believed an asteroid would smash into the Earth in a month, why not borrow, borrow, spend, spend and live for today? Chris, what am I missing?

 

deggleton's picture
deggleton
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Joined: Mar 18 2008
Posts: 250
Re: Debt does not assume tomorrow will be better.
Dr.Steve wrote:

I totally agree that debt is a loan from the future. However, the assertion that debt assumes the future will be better (Chris also uses "bigger") than the present does not always seem to be true. It may often be true, but that doesn't make it a "law" unless it's always true.

. . .

Some say to get out of debt, but I conclude the opposite. If you believed an asteroid would smash into the Earth in a month, why not borrow, borrow, spend, spend and live for today? Chris, what am I missing? 

CM must also assume the borrower is consciously doing something exceptional and intends to repay (or do what is required).  Lenders assume the same conditions, or they are sponsors/benefactors.

Would you be happier if CM took time to acknowledge that some who are living for today have no honorable intentions?

cmartenson's picture
cmartenson
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Posts: 5570
Re: Debt does not assume tomorrow will be better.
Dr.Steve wrote:

I agree with everything in this chapter, however there is one assertion which may not be correct. Perhaps Chris can elaborate -?

I totally agree that debt is a loan from the future. However, the assertion that debt assumes the future will be better (Chris also uses "bigger") than the present does not always seem to be true. It may often be true, but that doesn't make it a "law" unless it's always true.

Actually the assertion that the future will be "better"  is not made anywhere in the Chapter on debt (or elsewhere). I invite you to go back and relisten to the chapter or, more quickly, you can scan the text below the video to determine that the word 'better' does not appear, nor is any other qualitative claim made about the future.

Instead I was quite careful to only claim that the future must be bigger. Bigger as in more cars sold, more houses built, more stuff consumed. 

This is a central concept to understanding the role of debt in shaping our collective experience and in predicting what the future holds so I am glad to have the opportunity to clarify the point.

Best,
Chris

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Markjohn
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Joined: Nov 4 2010
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Re: Debt does not assume tomorrow will be better.

Hi

I fully admit with the views on the debt chapter.If you are living with a large debt,putting together a budget-an itemized account of income and expenses-is the only the first step to getting your finanicial house in order.We need to take some bold measures to manage our debts.

1)Cut deals with your creditors.

2)Borrow money to pay off debt.

 

No credit check payday loans

 

 

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mariusm98
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Joined: Jun 16 2011
Posts: 25
So it's bigger

Honestly, I can't see that Chris clarified anything. 

How does a loan assume that the future will be "bigger" than the present? The only thing a creditor strictly has to worry about is that the debtor can pay the interest in the future. Depending on the debtor's total debt, he could easily manage this, even if his income decreases.

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