Productive Debt, Non-Productive Debt, a Cup of Coffee and Blockchain..!!
DEBT..!!
The World is awash with Debt and no one can disagree with this.
Having studied Debt for many years and it's effects when incorrectly applied I wanted to share with you a concern that I have been talking about since 2008.
Don't get me wrong I am not totally apposed to Debt, what I am apposed to is when Debt is proportioned in a manner that leaves it mathematically impossible to be ever paid back..!!
In order to cover the subject of Debt it is important to understand that the current Global Monetary System based on a Fiat Currency is nothing more that a Debt Machine where Currency is produced and sold by Treasury Bonds whose return is paid back by issuing more Bonds.
It is nothing more than a Ponzi Scheme that is swept under the carpet and only works on the basis that the majority of the population is totally unaware of it.
So to start tackling Debt you have to understand that the pure fundamentals of existing Currency is a Debt Instrument that borrows wealth from the future to pay for the wealth of today on the hope that the wealth of the future is greater than that of today.
This Fiat Ponzi Scheme is OK providing this is true, however should the wealth of future be less than the wealth of today this is where the system fails and fails dramatically.
Understanding that the Fiat Currency is a Glorified Debt Instrument and nothing more than an IOU you then have to look at the Debt that we are all familiar with.
In this instance I would like to look at the two types of Debt that there are.
Productive Debt and Non-Productive Debt.
Productive Debt
Productive Debt is debt that is taken on by borrowing money and spending it on creation of wealth. An example of this is by Government spending on Infrastructure Works where the works benefit the future Infrastructure.
Applying this definition to Private Debt is debt that is taken on to enhance a personal asset that creates added value to the asset and therefore creates future wealth.
Non-Productive Debt
Non-Productive Debt is debt that is taken on by borrowing money and spending it on day to day living expenses. This is applied to both Government and Private spending where no added value is created by taking on the debt.
An easy explanation of this is taking out Debt to pay for a cup of coffee..!!
The purchase is a consumable that creates no added wealth to the future and once consumed is gone forever and yet the debt remains.
Challenging Times
These are financial challenging times and one that is seeing a disproportionate amount of Private Debt being taken on in comparison to wealth creation.
Unless this Private Debt binge is tackled head on and addressed fast then a Debt Shock to the Financial System will make the 2008 Credit Crisis look like child's play.
Blockchain
The title for this blog was "Productive Debt, Non-Productive Debt, a Cup of Coffee and Blockchain..!!" which leads me nicely onto Blockchain.
The Fiat Debt Based Monetary System is here to stay and yet there is not one person on the Planet smart enough to Calculate the Systemic Risk to the Global Financial System which is made up of Debt, Derivatives and Stimulus.
In the future all DEBT will be on a Blockchain.
This is both Government and Private Debt, both Productive and Non-Productive. On other words ALL DEBT..!!
Without this the Global Financial Monetary Policies that are being applied today are nothing more than GUESSWORK..!!
Thanks for reading,
Stephen
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I oppose debts being imposed upon me without my consent. Government debt and taxes do not allow me to make rational economic calculations.
Not 1 cent should have been gifted to the banks in 2008. It they had failed they should have been allowed to collapse. Not 1 cent of tax payers money should have been given free to the banks. People will wish it was 2008 when this fails again. AND IT WILL. Thanks for your support. Stephen
Failures should fail. Don't prop up companies that can't serve the market. Their resources need to be reallocated through the market process of bankruptcy. Institutionalizing and protecting failure is bad for everyone.
"Too big to fail" isn't a thing.
"Failures should fail"...I could not have put it any better myself. Great comment. Stephen
Great post!! Always informative and interesting to read your posts.
Upvoted and resteemed!
Steem on,
Mike
Awesome. Thanks Mike. Always appreciate your support. Thanks for the ReSteem. Stephen