Global Tipping Point: Good Debt Vs. Bad Debt - Which is Winning?
Isn t
Well, in a word, no.
Broadly speaking, there are two types of debt. One of them actually adds value to the economy if handled in the right way, so you might call this a good form of debt. However, there s another type of debt (or credit) that hurts the economy.
A classic quote from an
Elliott Wave Theorist provides insight:
Self-liquidating credit is credit that is paid back, with interest, in a moderately short time from production. Production facilitated by the loan generates the financial return that makes repayment possible. It adds value to the economy.
Global Market Perspective mentions non-self-liquidating debt as it shows this chart and says:
Total global debt has risen dramatically this year and [is expected] to exceed an eye-watering $277 trillion by the end of 2020, [which] will equate to around 365% of global Gross Domestic Product, up from 320% at the end of 2019.
[The] increase in private sector debt is not healthy, self-liquidating debt which, for example, would come from borrowing to invest in a new factory, the debt being paid off via the increased production. No, this is unhealthy, non-self-liquidating debt which is being added and the same is true for U.S. households binge on mortgage debt.