Saturday, June 1, 2013

The difference between debt and credit


Debt is not good for growth. Credit use is good for growth. Debt is what remains after the benefit of credit use has passed.

Debt is bad for growth. Credit use is good for growth, and debt is bad. Yin and yang, shadow and light.

You go to the bank, borrow some money, and buy yourself something nice. That's credit use. It's good for you, and it's good for the economy.

A few weeks later, your first payment comes due. That's debt. It's bad for you, and bad for the economy.

2 comments:

Gene Hayward said...

A great summation. I put it on my blog to use in class as a discussion question...The offer for lunch I make at the end stands. :)

http://haywardeconblog.blogspot.com/2013/06/the-use-of-credit-gives-us-sugar-high.html

The Arthurian said...

Haha, Nice!

"deceptively short and may seem obvious"

Yeah, that's my goal... to make everything about the economy deceptively short and seemingly obvious.

Thanks Gene. Glad you can use it.