David Korten: Good Debt, Bad Debt

[marmar]

from YES! Magazine:



Good Debt, Bad Debt
David Korten explains the logic behind a debt-based money system—and why it isn't working in the United States.

by David Korten
posted Feb 08, 2011


It appears that we are a nation addicted to debt. In 2009, U.S. public and private debt totaled $57 trillion. Of this total, $42.5 trillion is private household/business/financial sector debt and $14.7 trillion is federal/state/local government debt. Of the private debt, $13.5 trillion is household debt, accounting for 122.5 percent of annual disposable income. Of the total U.S. debt, $14 trillion is owed to foreigners. Current U.S. GDP is $14.3 trillion.

So is this a problem?

Most of the money in circulation is created as credit when a bank issues a loan. By the nature of this system, no debt means no money. Now that would be a really big problem in an economy that cannot function without money.

More important than the size of the debt is the question of whether it is good debt or bad debt. So what’s the difference? ..............(more)

The complete piece is at: http://www.yesmagazine.org/blogs/david-korten/good-debt-bad-debt

[jwirr]

1. Personal experience: the difference is if it can be repaid. Like the housing

loans bankers have not been careful about who they borrow money to. They have taken the same risks on credit cards as they did on housing loans because they could resell the bad debt to others in the criminal system. This is bad debt and it strangles the idea of real commerce because it ignores reality.