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View Diary: America Should Balance Its Budget Just Like American Families Do (13 comments)

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  •  The smartest thing I ever did was to go into (1+ / 0-)
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    debt when I was in college. In the early 70s interest rates were relatively low and interest was not charged while I was in grad school. By the time that I finished my doctorate inflation had sky-rocketed and the value of the principal in the loans had almost vanished. I paid them off with my first postdoc paycheck because it was more trouble than it was worth to keep up with the paperwork.

    My lessons:

    1) Borrowing to purchase a useful asset (college degree in my case) is great if that asset will generate income to pay off the loan.

    2) Long term borrowing at a time of low interest rates is also a great idea. Bet with reversion to the mean, not against it.

    3) If someone is silly enough to give you a loan with a negative real interest rate, take it. US t-bills are paying negative real interest rates now.

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