Debt is not meant to be paid its new money just

[God Of Thunder]

This is exactly why debt-based economies like the US economy are Ponzi schemes and will experience catastrophic collapses. We've already seen one catastrophic collapse back in 2008 which was the first sign of this serious problem in the debt-based economy. A dire sign that led to the creation of Bitcoin which we all love and have adopted. The next collapse could be a lot more catastrophic and last longer compared to the previous one since these things tend to grow as that debt grows, it's like a disease.

I was too young to witness and understand what actually happened in 2008. I don't remember anything about the economic collapse. Could you please enlighten me more about it so I can understand what to expect if the same thing happens again in the future? What caused that collapse? Are we doing the same thing again? As an average Joe, how would people survive such a collapse? I am probably asking a lot of questions, but I am asking because the sources don't tell us why it happened. I found a Wikipedia page about it which says the cause was excessive speculation on property values by both homeowners and financial institutions - https://en.wikipedia.org/wiki/2008_financial_crisis

[SilverCryptoBullet]

This is exactly why debt-based economies like the US economy are Ponzi schemes and will experience catastrophic collapses. We've already seen one catastrophic collapse back in 2008 which was the first sign of this serious problem in the debt-based economy. A dire sign that led to the creation of Bitcoin which we all love and have adopted.

The Coinbase message in the Bitcoin Genesis Block is an icon for Bitcoin creation and history but with people who are still exploring about Bitcoin, considering whether it is good for investment, or newbies in this market will likely not know about it.

Bitcoin Genesis Block.
Bitcoin Genesis Block Newspaper.

The message is

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

[Hispo]

Interestingly enough, there are countries which do not use debt or credit history in order to give more financial benefits to citizens. Here in Venezuela we don't have formal debt with banks, because our currency loses value at a higher pace than the interest itself, so banks actually lose money when they grant loans to people. It is crazy, but that is something which only happens in hyper-inflationary economies like this one.

Also, it is obvious that debt is used to increase demand and hence value on certain products and services, of all people in a country had access to high levels of credit, then gold, shelter and commodities would increase in value because of the huge new demand. Nothing new, just basic economics.

[wiss19]

Debt is really good if you are careful and know how exactly to use it. Debt can also be dangerous on other hand. I have seen people go bankrupt just to avoid repaying the debt because it was getting out of control. If you do not repay the debt on time, there will be heavy interest levied and this will start compounding until and unless you make the payment. With a stable job or income source, it is really easy and actually beneficial to use debt but without any stable source, debt will be like a ticking bomb, and I would mostly tell people to avoid going for debt if they do not have any stable income source.

Debt can not only increase our income if invested accordingly but it can also keep our assets safe without liquidating them. Mostly for businesses, debt is like a life saver as it gives ample of working capital and business can quickly scale up without worrying about the capital.

[BIT-BENDER]

Debt financing can be good based on the amount of interest paid on the principal amount,  this should be the first thing a lender should check while considering to take loans.

If you use your assets as collateral and the interest is high, you end up paying more if your investment turn-out becomes low due to unforseen economic situation, like increasing tax on assets like real estate and other digital assets.

Debt financing is something you have to ensure you are doing correctly else you may just make mistakes that can get you bankrupt in a very fast space.
Debt financing will work in full effect if you own businesses, asset that are valuable so those who gave you the loan can believe in you and even give you more loan.
Debt financing is also a means to evade taxes legally and billionaires use this so much because rather than taking profit they take loan to buy expensive things that they need.

[beerlover]

Interestingly enough, there are countries which do not use debt or credit history in order to give more financial benefits to citizens. Here in Venezuela we don't have formal debt with banks, because our currency loses value at a higher pace than the interest itself, so banks actually lose money when they grant loans to people. It is crazy, but that is something which only happens in hyper-inflationary economies like this one.

Also, it is obvious that debt is used to increase demand and hence value on certain products and services, of all people in a country had access to high levels of credit, then gold, shelter and commodities would increase in value because of the huge new demand. Nothing new, just basic economics.

That's actually crazy. I was not fully aware about the hyper-inflationary economies like yours in Venezuela. I wonder what other means of debt financing are available in your country. Debt is really important because it can help us achieve our dreams much sooner. Without debt, it might take years before we can even purchase a car or house. Debt is required in almost every aspect and without debt, we either need to be super rich or super smart to save before we spend. I guess there might still be some institutions which might offer loans, but I am sure the interest rates will be skyrocketing because the fiat keeps losing value.

In this case, cryptos can be a life saver for you. Let's not forget, we have the opportunity to seek loan using cryptos as collateral so this will keep our crypto holding safe while giving us some working capital. I am sure most of the citizens from your country might already be using cryptos.

[Findingnemo]

Debt is really good if you are careful and know how exactly to use it. Debt can also be dangerous on other hand. I have seen people go bankrupt just to avoid repaying the debt because it was getting out of control. If you do not repay the debt on time, there will be heavy interest levied and this will start compounding until and unless you make the payment. With a stable job or income source, it is really easy and actually beneficial to use debt but without any stable source, debt will be like a ticking bomb, and I would mostly tell people to avoid going for debt if they do not have any stable income source.

If we say job then debt is not good, it is good for the business and then for the successful investors who don't want to sell their assets when the market is down but can use it as collateral to get the loan and repay the debt just with the profit they make from ther assets growth. But if we say job then we are going to pay from what we make so certain amount will be wiped from our source then the inflation, price hike and everything will make the life miserable.

[bhadz]

That's what the rich do, they use their assets for collateral so that they can leverage the money from the banks through debt in creating more wealth. This is their game and they're not just taking a loan there but also putting their collateral into risk. Because if they fail to pay their obligations, they know what might happen to the assets that they have put in leverage as collateral. In words, it's easy to do that but in reality it's not. Even if you've got a lot of resources, what matters when you do this is cash flow. So, cash flow is king when you'll use debt in making more money.

[gibrab16]

That's what the rich do, they use their assets for collateral so that they can leverage the money from the banks through debt in creating more wealth. This is their game and they're not just taking a loan there but also putting their collateral into risk. Because if they fail to pay their obligations, they know what might happen to the assets that they have put in leverage as collateral. In words, it's easy to do that but in reality it's not. Even if you've got a lot of resources, what matters when you do this is cash flow. So, cash flow is king when you'll use debt in making more money.

Well said. People often talk about leverage like it’s some kind of cheat code, but they forget the risk on the other side. Using assets as collateral only works if the cash flow is strong enough to service the debt consistently.
Even wealthy people can get into trouble if that balance breaks. On paper it sounds simple, but in reality it’s cash flow that decides whether leverage builds wealth or destroys it.

[bhadz]

That's what the rich do, they use their assets for collateral so that they can leverage the money from the banks through debt in creating more wealth. This is their game and they're not just taking a loan there but also putting their collateral into risk. Because if they fail to pay their obligations, they know what might happen to the assets that they have put in leverage as collateral. In words, it's easy to do that but in reality it's not. Even if you've got a lot of resources, what matters when you do this is cash flow. So, cash flow is king when you'll use debt in making more money.

Well said. People often talk about leverage like it’s some kind of cheat code, but they forget the risk on the other side. Using assets as collateral only works if the cash flow is strong enough to service the debt consistently.
Even wealthy people can get into trouble if that balance breaks. On paper it sounds simple, but in reality it’s cash flow that decides whether leverage builds wealth or destroys it.

There is no magic in it and that's why those who understands how it works can fairly say that it's not an easy thing. Because with so many contents about this on the internet, they're making it seem to be normal and easy which is not. I agree that the rich can also put themselves into trouble if they have no strong cash flow and other source of income. Those who have been doing it have a lot of support from the various income sources that they have. They won't just let their single asset gone by failing to pay that up but, they always have a plan B which others might know how to do it but can fail in actual application.

[yhiaali3]

Debt is a game played by the rich an banks to acquire the valuable assets and properties of the poor in exchange for worthless cash.

Borrowing is unwise except in circumstances where money cannot be obtained otherwise, as you will end up paying much more. However, in some countries where the local currency is constantly depreciating due to inflation, debt can be advantageous for acquiring property, for example, since the long-term payments become almost worthless, and you end up with a property of greater value.

[livingfree]

Whats the main point of debt is to build credit history to get bigger loans

Someone who's focusing on increasing their credit score are forced to take loans so that, they'll increase their limit which is not a bad thing.

I think if you have nothing to spend it on, just keep it and don't usually use it unless the bank will give you a requirement whenever you have to take these loans.

But in the end, a loan is a loan and it won't classify your wealth because I see people bragging their credit limit.

[CageMabok]

...

Well said. People often talk about leverage like it’s some kind of cheat code, but they forget the risk on the other side. Using assets as collateral only works if the cash flow is strong enough to service the debt consistently.
Even wealthy people can get into trouble if that balance breaks. On paper it sounds simple, but in reality it’s cash flow that decides whether leverage builds wealth or destroys it.

Leverage is a very different beast from the norm, because some people who still like to play it safe in the usual way won't have the courage to try something leveraged. Because the losses that can occur with leverage are truly zero losses, not just price drops. Even a wealthy person who experiences this, they would still be overwhelmed if it happened repeatedly. That's why not everyone can dare to venture into the realm of leverage. Besides being limited by their capital level, they may also be limited by their inability to withstand losses of a certain amount until they reach zero without leaving anything behind.

[AgriTrack]

For an individual, whether debt is good or not depends on the purpose of the person. If debt is acquired due to the need for investment, then it can be said to be a good one since the debt will be used to generate money that can be used to pay the debt and even strengthen the financial capability of the debtor.  When it is used just to buy a luxury item, then that would be a waste since these items depreciate over time, making the debtor lose money the moment they buy the luxurious item.

I think Debt often launch to promote the economic activities that is why government announce different schemes and compaign to promote small businesses and used different hashtags for it. So taking debt in not bad but I think the person who are interested in taking the loan he should compare its profit that he is expect to earn with the interest rate he will have to pay on the debt. So if the profit is lower than the interest rate then  it is not beneficial because it will create burden. For me taking loan is only helpful when it creates income for you but if it create stress then avoid by taking this.

Although the government or the banks present loan as a good opportunity but I think it is your responsibility to decide whether taking loan is truly useful for your business or not. Another point to keep in mind that when the government or the bank giving you loan so that terms and conditions sometimes very strict. So it is essential to read all conditions carefully before making any agreements to avoid any future problems

[Agathamay]

For an individual, whether debt is good or not depends on the purpose of the person. If debt is acquired due to the need for investment, then it can be said to be a good one since the debt will be used to generate money that can be used to pay the debt and even strengthen the financial capability of the debtor.  When it is used just to buy a luxury item, then that would be a waste since these items depreciate over time, making the debtor lose money the moment they buy the luxurious item.

Debts can be seen as a wise decision exerted by a person or it can simply be an action taken out of desperation to live the luxury life. Common life doesn't end here, we've seen more clarities and knowing what we know now, we should be extremely careful with this term "debts" we should always be able to afford what we need only when we don't go above our standards. Learn to cut your coat according to your size besides its new year, we should be more focused on the grinding momentum that will elevate us to the next boarder. Debts is temporary and not permanent. Sometimes it takes courage to bounce back to the top, it's never going to be an easy one.

[Youngrebel]

Debt is creation of money reason for debt and loans on assets collateral is just reason how rich people can get money without selling their assets if they not super extremly ATH.

When gold silver btc real estate are super extremly ATH then rich ones smart ones will sell to poor ones and to middle class and wannabee rich ones assets until then they dont sell assets they borrow against assets.
When time right and margins and debt ratios are up maximum then money goes in pocket, for example trump and his bank loans.

Fact that banks and financial instutions buying now assets like gold means they need collateral so it means they will do another round of money printing so gold btc silver and all other assets will be as collateral to create new money and a lot money.


Whats the main point of debt is to build credit history to get bigger loans and same time pmp up assets prices you hold because when asset price is not super duper hyper extremly high the smart like trump kind of dont sell and neither they buy if asset not super duper hyper extremly low.

More reason 3hy the rich gets more richer. Indeed this is a great way of creating more wealth without any form of stress or problems.  The rich dont really stressing them selves for too much.

[Unknown Op]

Debt is creation of money reason for debt and loans on assets collateral is just reason how rich people can get money without selling their assets if they not super extremly ATH.

When gold silver btc real estate are super extremly ATH then rich ones smart ones will sell to poor ones and to middle class and wannabee rich ones assets until then they dont sell assets they borrow against assets.
When time right and margins and debt ratios are up maximum then money goes in pocket, for example trump and his bank loans.

Fact that banks and financial instutions buying now assets like gold means they need collateral so it means they will do another round of money printing so gold btc silver and all other assets will be as collateral to create new money and a lot money.


Whats the main point of debt is to build credit history to get bigger loans and same time pmp up assets prices you hold because when asset price is not super duper hyper extremly high the smart like trump kind of dont sell and neither they buy if asset not super duper hyper extremly low.

More reason 3hy the rich gets more richer. Indeed this is a great way of creating more wealth without any form of stress or problems.  The rich dont really stressing them selves for too much.

Debt is very important for the big entrepreneurs because they are taking debt and they are Investing this money in different assets because they know how to buy and they are buying the gold and silver and copper. These are metals and their demand in high in the market and it's price will go up with time . Millions of people have money and they want to invest their money in gold but cryptocurrency is best to create more wealthy because no other investment will give you more returns. Loans should not be taken for useless things because there are many people who are taking loans and they are taking for the bike which is big debt because it will not give anything to us . You should think the future and many things are good for invest.

[Maus0728]

You're right that anyone can pay their debt with another debt but what you're describing doesn't really work for an individual, paying your debt with another debt is only sustainable to some degree if you have a large enough asset that the bank can afford to loan you the money because your asset can be a collateral in the case that you won't pay them but then again, you just pay them with another debt from another bank. Now imagine that in an individual scale, you can't sustain that kind of lifestyle unless you have the money pouring into your account to back it up. Us plebeians don't have a stake in the debt paid by debt game, we could never even fathom how difficult it is until we get to that point, my point is that it's easy to say that you can use debt to pay another debt but in practice, it will be a really difficult thing to do.

[Queen uloma]

For me I don’t like taking loans, because paying back will be very difficult for me, anytime, I pay back loan I feel that am losing money, Those who borrow money to start up a new business, are making a very  big mistake, because the business might not go smooth as plan, though it may work for other people but not everyone, so before you go into borrowing loan, make sure the collateral isn’t that much let it be an amount you can pay without regretting.

[Stablexcoin]

For me I don’t like taking loans, because paying back will be very difficult for me, anytime, I pay back loan I feel that am losing money, Those who borrow money to start up a new business, are making a very  big mistake, because the business might not go smooth as plan, though it may work for other people but not everyone, so before you go into borrowing loan, make sure the collateral isn’t that much let it be an amount you can pay without regretting.

There is nothing wrong with taking loans, it depends on the reason and how you plan to pay back. For some borrowers are too relentless to pay, not everybody should take loans if you hardly pay back. People take giving out loans with interest as business, including local loans, even bank give out loans, and the highest borrowers are the rich people, most of them are free to take any amount because they have good collaterals in case of things doesn't go as planned.