With recent news overwhelmed by the financial difficulties of US state and national budget deficits, along with the continued financial difficulties in Europe there is a renewed focus on the impact of debt on national wellbeing.  This is especially important because most of the developed world is not far behind the major problems of these European nations.  The most important thing to understand about debt is exactly what it is, and by extension, what it is not.
What’s the Deal with Debt?
Fundamentally, debt is a financial magnifying glass.  It will amplify …

The German story of Faust is well known throughout literary and scholastic circles.  In the story, Faust is a successful scholar who is unsatisfied with his life and bargains with the Devil.  He offers his soul in exchange for unlimited knowledge and worldly pleasures.  The popular term: “deal with the devil” originates from the story of Faust.  This story has also been interpreted by some as a metaphorical representation of an ambitions person who compromises their moral integrity to achieve power and success.
A more appropriate interpretation for the current political …

In the midst of the constant headlines concerning government ‘bailout’ initiatives that have resulted from a credit crisis in the financial sector, one must stop to wonder whether the government is acting responsibly and what the likely results of these actions will be. (In truth, one doesn’t have to wonder that much … the government is acting with an almost complete lack of anything resembling financial responsibility.)
The core driver of this problem is that public agencies making market decisions will tend to make them based on political expediency instead of …

An Article recently published by the International Business Times explored the potential for problems associated with aggregate student loan debt.  Since the total student loan debt outstanding exceeds $1 Trillion dollars, the scope of the problem seems immense.  When complicated by the 30% of student loans that are 30 or more days overdue, there appears to be a crisis brewing.
The concern expressed by many is that the burden of student loan debt will suppress people’s future disposable income.  To many, this presents a dire scenario where future consumption spending cannot …

Throughout the lexicon of financial advice in the marketplace, there are many different views regarding the role of debt in our lives.  The traditional view is that debt causes us to make interest payments that deplete our wealth and erode our ability to build wealth.  In the case of the current mortgage crisis, many lending institutions and government agencies encouraged excessive lending to borrowers that were in very high risk of default.  This has even prompted some financial authors to proclaim that all debt is bad, regardless of what it …

Recent disappointing economic growth figures have brought a halt to what some had perceived as a budding economic recovery.  The narrative had been that a rapid expansion of government spending in 2009 had “stimulate” the economy into recovery.  Not surprisingly, the same people who supported government stimulus before are now clamoring for even more spending.  However, the burgeoning national debt, and lack of significant improvement in employment and economic growth has caused some to call the effectiveness of government stimulus into question.
According to the economic philosophy of John Maynard Keynes, …

Recent news has been dominated by the debate surrounding raising the US debt limit.  The US Treasury has stated that August 2nd is the date after which the US government would not be able to meet all of its planned spending, due to a shortage of funds.  This situation is the dreaded “default” that many have referred to in the repeated interviews and press conferences that have been conducted on this topic.
The part that most in political office fail to disclose is that the interest on government debt makes up …

As we move throughout life, we frequently hear glowing speeches from political figures about the responsibility to our posterity.  For some reason, these concatenations of rhetoric seem to be frequently accompanied by a proposal for profligate spending that will enslave our posterity into an eternal spiral of debt.  Furthermore, this propensity does not seem to stop with any particular political party.  The Bush administration racked up a record amount of debt that has already been eclipsed Obama administration, with the trajectory set for an expansion of national debt that shatters …

The current economic environment has many seeking various solutions to the problems that have unfolded and are currently causing damage to the economy. The principal driver of this economic damage is the large market bubbles that have emerged, grown, perpetuated and collapsed.  The inherent irony of this situation is the fact that the persistence of these market bubbles and the proposed solutions both bear the same fundamental flaw.  This flaw is that each is steeped in a desire to achieve utopia.  The housing bubble sought a utopia of home ownership, …

Recent news of the US national debt topping $14 Trillion and nearing its legislative ceiling have spurred another (badly needed) discussion concerning government spending obligations.  Whenever the topic of national debt re-enters the domain of public conversation, there are two opposing priorities that consistently pull against one another.  The first is the desire to continue current (unsustainable) rates of government spending, and the second is a concern over the burden that is being passed onto the next generation in the form of a tremendous national debt.
An appropriate metaphor for this …