When Should You Borrow Money?
The answer is almost never. Worldwide, governments and businesses reflect the honesty and discipline of their people. Governments can print money to pay off debt. You can’t do that—at least not legally. Try going to the bank and telling the lender not to be concerned with your credit because your kids and grand kids will pay back your loan. Good luck.
Debt to Pay Debt
Worldwide financial problems can be attributed to borrowing more money to payback the money you borrowed and to continue functioning. People in the United States demonstrated the process when they took out home equity loans assuming their homes would always go up in value and that they could then sell the home to pay back the debt. World governments and central banks assume the same scenario. They assume that mankind will produce more, thereby being able to pay the money back. They have been wrong for years and the bubble, like the real estate one, is growing daily while future generations will find themselves more and more burdened by the debt, ruining their own ability to produce goods and services, further exacerbating their ability to pay off the debt. Unemployed folks find it extremely difficult to pay back debt or even to borrow more money to survive economic disappointments.
The Solution
1. Only borrow when you are sure you can pay it back. Most borrowing is based upon some kind of gambling on the future. Its like losing at the casino and going to a loan shark for money to support your habit.
2. Borrowing worldwide drives inflation. When nobody can get a loan, car and home prices drop. When anyone can get a loan, car and home prices go up. In general, avoid borrowing money.
3. Borrow money for medical and legal emergencies only.
The Result
If folks borrow less, prices will go down and the world will become fiscally sound. You have a roll to play in the world. It requires honesty and discipline. If you want a responsible government and responsible businesses, you have to set the example at home and with your children.
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