15d • General discussion
Debt thought experiment.
Just completed another chapter of my book, "Against the Gods, The Remarkable Story of Risk" by Peter L. Bernstein. This chapter had a lot of interesting information, so I'm going to take a shot at generalizing the idea.
In France in the 1600 -1800 businessmen began pooling money together to offer insurance of all types as well as debt. Thomas Babin Macaluay, a great English historian, specifically remarked how this left statesman and philosophers dumbfounded. Why these characters specifically is definitely an idea to explore.
But I think the idea of debt is funny. Across all different types of debt instruments, the underlying premise is simple. The transfer of wealth from one to another, with at least one party not having access to the exchange value at present time (or at least not willing to commit the amount). Therefore, each party carries an amount of risk with the agreement.
I think each party, the lender or lendee could come out on top. In an ideal world, both parties become satisfied with the agreement. However, the lender (in typical circumstances) should face less risk in the long run. I think the concept can become predatorial against the lendees, but also think lenders might over leverage themselves. But i am also intrigued to why statesman and philosophers are so confused by the idea of debt. I think it definitely requires a clever understanding of relationships your involved in and how cash is related to that relationship.
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Debt thought experiment.
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