Libor Hits Decade High, A Worldwide Debt Default Is A Real Possibility

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A Worldwide Debt Default Is A Real Possibility

Is debt good or bad? The answer is “Yes.”

Debt is future spending pulled forward in time. It lets you buy something now for which you otherwise don’t have cash yet.

Whether it’s wise or not depends on what you buy. Debt to educate yourself so you can get a better job may be a good idea. Borrowing money to finance your vacation? Probably not.

The problem is that many people, businesses, and governments borrow because they can. It’s been possible in the last decade only because central banks made it so cheap.

It was rational in that respect. But it is growing less so as the central banks start to tighten.

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