Consider the various types of debt: personal, firm and government. All these forms of debt and the related metrics are, in most major economies, at record highs. This debt has created asset inflation however the related issue of debt servicing is rarely discussed.

All debt is really a promise against future income which is really future production and so debt servicing will consume the inputs to production such as labour, energy and natural resources. This means that any debt of any form by any entity within an economy is going to be maintained by the physical labour of people, energy (power) and material taken from the land (food, ore, etc).

Let’s focus on labour and put aside land and energy as these costs are usually arbitrary and their limits are very high, especially with the unsustainable practices.

• Personal Debt is serviced by the labour of the individual incurring that debt or from purchased assets which produce returns (like housing rent or equities). Then either another person works (e.g. to pay rent) or a firm pays through costs or by return on equity.
• Corporate Debt. For firms, consider their whole supply chain which commences from primary production taking from the land using people, equipment and energy. The equipment is an output the supply chain itself so the supply chain is really made up of people as we are putting aside energy and land. Therefor firm costs are just labour and any profit is the margin on labour.
• Government Debt is serviced through more debt or tax revenue. The taxes are applied on people or firms which transfers to labour. Additional debt is only a delay to future taxes.

The take away is that ALL DEBT IS SERVICED BY LABOUR.

This puts a critical perspective of a system that encourages debt as it really does enslave.

Consider when a government plans for more debt – it means that more people will donate more effort to service that debt. It is particularly insulting when that debt is ineffective due to pork barrelling, government inefficiency and corruption. It is better for governments to print money than to borrow it into existence from themselves.

We know that debt is very popular – lots of countries, people and firms have it. There is a propensity to increase debt for economic sustainment, social wellbeing and political expediency which just accelerates waste in productive capacity: labour used to service debt is lost and so is a drag on the economy. So more debt -> more servicing -> more labour servicing debt -> more drag on economic activity.

Going to an extreme level of debt means that almost all the population would be working to service debt so at some point a hard limit on labour is reached and the debts would be inevitably defaulted. The journey to those extreme levels creates poor outcomes for the human condition.

As any debt requires someone somewhere in the world to work to service it. This is a significant moral hazard to all societies and cultures that promote and expand their level of debt.