ON DEBT

The subject of debt has always been controversial. People never seem to agree on whether debt is good or bad. 

The moralist will argue that debt leads you down the road to perdition, and it is so much more satisfying anyway to save up and enjoy the fruits of delayed gratification than to binge on future earnings. 

The economist will say that debt keeps the wheels of the economy moving and the machinery of commerce functioning, and hence everyone should borrow.

The hedonist will aver that it is better to live life for today, borrow and enjoy, for who has seen tomorrow? 

The personal financial planner will say that all portfolios need an "allocation" to debt which should increase as you grow older for debit is less risky. 

I think everyone is missing the point. 

We need to understand the nature of money and the structure of modern capitalist systems first to think through this properly. 

As a youngster, you need to start saving up, and ensure you don't live beyond your means. The modern consumerist culture encourages reckless spending and you need to be wary that you don't fall into the consumerist trap. 

Credit cards, easy EMIs on durables, and other forms of easy credit lure you into a lifetime of deficit, ensuring you keep working for money which is perpetually in short supply. 

Youngsters should avoid debt.

It is not very easy to do so in some cases. What about that educational loan, should you take it? 

Be very careful when you think that through. Most education is useless. Are you really going to borrow and spend 100000 dollars for an undergrad degree  studying gender rights and LGBTQ issues? Does that Comp Science degree teach you anything that won't be obsolete by the time you pass out? Is that MBA degree worth anything at all? Even if they were worth something till now ( except the liberal arts courses, they are of course a scam), in the new world these degrees are going to be useless. 

That does not mean you don't learn of course. Since when have degrees had anything to do with learning? 

Education is one example. In every area of life, learn the difference between price and value, and you may never need to borrow in the first place. 

But as you grow and start saving, you need to take a different view. 

The money that we think is wealth, the rupee, the dollar, pound, eura, dinar... They are all what is called "fiat" currencies, just worthless pieces of paper that keep depreciating in value. 

Forget all the finance theory and what the personal financial planners tell you. Forget what you have been taught to think. 

Think. 

Would you hold your savings in real assets or in that useless fosterer of illusions called money, that constantly keeps going down in value? Why on earth would you keep your savings in the form of money? 

Why would you want to hold fixed deposits, debt mutual funds, or any other form of debt when the return that you earn , that mirage called interest, does not keep up with the debasement of the currency itself? 

Debt is a way for the system to systematically erode your savings, and appropriate it for itself.  It is foolish to invest in debt. 

Rather than that, borrow money if anyone is willing to lend it to you and invest that money in real assets. 

It is better to be a borrower rather than a lender. 

Think about it. 

And ask your financial planner what he thinks.