Investing in Debt

I was just reading the esr blog. There’s a wacko libertarian commenter who’s nom de guerre is shelby. He reminds me of many of the libertarian activists I used to hang out with. Wicked smart, but approaching the world like it’s a game they are in charge of designing.

Shelby said something that really made me think, paraphrasing and condensing:

All the institutional economic evils of the world are built on consumption debt. Take a minute and let this thought sink in.

This means your VISA bill, your mortgage (which is dressed up to pretend like it’s an investment), car loans and the social security “trust fund.”

The only people who should have debt are people trying to start or grow a buinsess.

Debt used to finance consumption is what makes fractional reserve banking necessary, along with a host of other evils that are hard to keep in their boxes.

I think Shelby has a great point, a la Glengarry Glen Ross: Debt, like coffee, should be for closers, not consumers.

I’m still mulling this over, but I’m starting to think that:

  • In terms of how much you contribute to the moral and economic decay of civilization, there’s no difference between a $300K mortgage and a $300K VISA bill. Actually, the mortgage might be worse.
  • Stealing is better than borrowing, if you’re that close to the line. I’ll call this the Jean Valjean Principle. At least stealing takes thought, effort and risk. Criminals can be reformed, welfare moms and welfare kids, not so much.

If you have debt related to consumption, including your house, your car, your Xmas gifts, you are not only being a dumbass, you are contributing more to the ultimate moral destruction of Western society than Snookie. The only excuse for having debt is if you are starting or growing a business.

At least my ass isn’t as big as Snookie’s.

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