Too Much Debt?

debt-illustration-crop-600x338How much is too much debt? There is no universal number, but too much debt is an amount that is so large that it cannot be repaid. Any individual can borrow too much money and any individual can lend too much money. In the case of two individuals, that can be a problem no matter how the system is set up. Odds of such a situation occurring in a free money market,  are at a minimum. Both borrowers and lenders are careful because there are consequences to both. In the aggregate, given a free money market, there can’t be to much debt. An economy can move forward even if default occasionally occurs. This is because, all the money that exists is earned or earned money that has expanded through a fractional reserve system.

Too much debt for a society only occurs when government creates additional money. All of money government creates serves the purpose of transferring dollars away from people who have earned and giving it to others who have enough political power to take it.

Some people insist that only gold can be money or that all money must be backed gold. That is o.k. but fiat money is fine as long as its amount is rooted in work that has been performed.  Genuine money is always backed by work.


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