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This might be the biggest problem with debt. High debt levels distort prices dramatically by collectivizing interests. Money gets spent the way it does within a marriage for instance -- driven more by the pair psychology and co-dependency pattern rather than any sense of value.
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Within a marriage, this is a good thing. Husband might ignore wife's spending to keep the peace. Wife might ignore husband's crazy man cave for the same reason. Parents might give in to kids demands for toys to avoid tantrums and exhaustion rather than to raise kids well.
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But the cost of this is all spending is towards the stability of the collective rather than the ostensible value of things being bought from the outside world. The price of the wife's cosmetics or husband's man cave or the kid's toys is set by the value of "avoid conflict"
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The collective that has bound itself in mutual obligation like a family using debt mechanisms has heavily overindexed internal signals over external signals. The "family" now no longer knows the cost/value of anything against an external reference.
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Or in terms of design of money, the design reflects inner psychological realities of the collective rather than outer material realities of survival and wealth creation.
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Or to put it in terms of a sociological metaphor, the "debt huddle" is so inward focused, it behaves like a locust swarm in the external world, feeding unsustainably on anything it can find.
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And opting out of the monetary system with gold or bitcoin is no use because the real base of value is people, and if the majority of people are in a locust-huddle due to economic-environmental stress, a few choosing not to be locusts can't change anything.
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The only way out of locust mode is to get back to equity > debt mode, which means finding new sources of external wealth and value that lower the sense of extreme risk, scarcity, and deprivation and unbundle the "collective family" into independent economic actors.
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Okay that thinking out loud helped. I think I understand debt better now. Not that it helps. Now I'm more convinced I'm very ill-adapted to this world since I refuse to be a locust bound to other locusts via mutual public debt obligations. I'll pay higher taxes, but that's it.
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Replying to
This is one area where, despite having basically the same attitude toward personal debt, I can't easily access your perspective. I think my notion of big-M Money as a concept must be quite different.
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Replying to
It has been a while since I read his book on Debt, but I don't remember finding much to disagree (though subtle things have big impacts, so perhaps there is).
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