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The more debtors pay, the more they owe. This isn't just a catchy phrase. It's a harsh reality. Imagine trying to fill a bucket with holes. You pour in water, but it keeps leaking out. That's what happens when debtors try to pay off their debts in a deflationary environment. Each dollar they pay back becomes worth more. So, while they might reduce the number of dollars owed, the value of what remains skyrockets. It's like running on a treadmill set to a steep incline. You might be moving, but you're not getting anywhere. This phenomenon, highlighted by Irving Fisher, is a ticking time bomb for economies. When debt levels rise, and prices fall, the real burden of debt increases. It's a vicious cycle. The more you pay, the more you owe. This isn't just theory; it's
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The more debtors pay, the more they owe. This isn't just a catchy phrase. It's a harsh reality. Imagine trying to fill a bucket with holes. You pour in water, but it keeps leaking out. That's what happens when debtors try to pay off their debts in a deflationary environment. Each dollar they pay back becomes worth more. So, while they might reduce the number of dollars owed, the value of what remains skyrockets. It's like running on a treadmill set to a steep incline. You might be moving, but you're not getting anywhere. This phenomenon, highlighted by Irving Fisher, is a ticking time bomb for economies. When debt levels rise, and prices fall, the real burden of debt increases. It's a vicious cycle. The more you pay, the more you owe. This isn't just theory; it's
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Steve Keen considers the following as important:
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| The more debtors pay, the more they owe. This isn't just a catchy phrase. It's a harsh reality. Imagine trying to fill a bucket with holes. You pour in water, but it keeps leaking out. That's what happens when debtors try to pay off their debts in a deflationary environment. Each dollar they pay back becomes worth more. So, while they might reduce the number of dollars owed, the value of what remains skyrockets. It's like running on a treadmill set to a steep incline. You might be moving, but you're not getting anywhere. This phenomenon, highlighted by Irving Fisher, is a ticking time bomb for economies. When debt levels rise, and prices fall, the real burden of debt increases. It's a vicious cycle. The more you pay, the more you owe. This isn't just theory; it's history. The Great Depression serves as a stark reminder. During that time, as people tried to pay off debts, the economy collapsed under the weight of rising real debt. We can't ignore this. If we continue down this path, we're setting ourselves up for repeated crises. Instead, we need a radical shift in our approach to debt. We should focus on reducing private debt to stabilize the economy. This means recognizing that debt isn't just a number on a balance sheet. It's a living, breathing entity that affects real lives. Ignoring this reality will lead to more economic disasters. We must learn from the past. Debt reduction isn't just a financial strategy; it's a necessity for a stable future. Let's not wait for the next crisis to realize this. The time to act is now. |
Still ignoring inflation linked state debt.
All goverment debt is paid for by the peasants. The label, private public is irrelevant.
That's cool, but unfortunately, the government doesn't care whatsoever
What if not debt is the problem but hoarding money?
Money does have the same term as the debt it had been created from. Money and debt are practically two words for absolutely the same thing.
So when the savers tend to save on average the money one year longer than the debtors credit terms, the debtors inject more money into the economy than it floats back to them resulting into that they create a bigger demand by spending it rather than the demand those are creating, who get this money as an income.
This is a deflation, because the only way to sell everything is to reduce prices.
The solution can be taxing savings in a way that the effect is the same as negative interest rates until the circulation of money is balanced again.
And what economists need to understand: money circulation does only have one turn – from money creation by going into debt to debt repayment. And we also know, how long it should take. It is the term in the credit contract.
What if they borrow large sums, buy items now that will cost much more in the future, and pay back the loans in the future with fiat that is worth much less than when it was borrowed