'Debt'.
I think it is justified in only 2 scenarios:
a. When debt allows an entity to acquire an asset which increases productivity in the long run; this can even be investment in an intangible asset, like 'skill set' or 'health'.
b. When debt is able to prevent a breakdown; of institutions, countries, corporations, or household.
In general, any requirement for debt, should be matched against a simple thumb rule; is this driven by a genuine need, or is an aspirational desire fueled initiative.
Also, acquiring debt for high risk investment is an all time NO ...
Fantastic article noting how debt/credit flows from country to country, private to public sector and so on ...
Credit - How it moves
Effectively, Debt is almost like energy .. it can neither be created nor destroyed.. if not serviced through innovation and structural mechanisms for quick re-allotment of capital and risk in economy, debt can only be 'transformed', not destroyed.
I think it is justified in only 2 scenarios:
a. When debt allows an entity to acquire an asset which increases productivity in the long run; this can even be investment in an intangible asset, like 'skill set' or 'health'.
b. When debt is able to prevent a breakdown; of institutions, countries, corporations, or household.
In general, any requirement for debt, should be matched against a simple thumb rule; is this driven by a genuine need, or is an aspirational desire fueled initiative.
Also, acquiring debt for high risk investment is an all time NO ...
Fantastic article noting how debt/credit flows from country to country, private to public sector and so on ...
Credit - How it moves
Effectively, Debt is almost like energy .. it can neither be created nor destroyed.. if not serviced through innovation and structural mechanisms for quick re-allotment of capital and risk in economy, debt can only be 'transformed', not destroyed.
