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World Debt Rising 3 Times As Fast As Global Wealth, page-12

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DavoMagic

16,806 Posts.

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14/01/18

11:37

Post #: 30288218
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Originally posted by jimace ↑

I put into Bold a thought that connects to a key principle. Overall, the greater the lending for consumption (relative to production), the sooner that debts become bad. Borrowing for consumption weakens the borrowers ability to repay that debt because by definition, consumption is not wealth generating. This has to include such debts as car finance. Often the car isn't wealth generating and also the car usually depreciates in value over time, so is poor collateral for the loan. Also, low or negative rental earnings (after building maintenance) on real estate (with unsustainable tax subsidies) indicate that there's plenty of consumption type real estate debt. The high proportion of consumption to production debt in the system is making the whole economy (yes worldwide) insolvent. The rules for finance will (have to change) as due to mass insolvency, the present system won't survive.

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Australians buying new cars is arguably the biggest deflator to the economy with funds going overseas when they could spend on superior alternatives
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