Friday, August 5, 2011

When does borrowing become thievery?

US national debt
(real and projected)
The borrower has an obligation to repay his creditor. Eventually, a loan has to be finished. Even when a creditor has bad intentions -- hoping his borrower experiences financial turmoil so unplanned years of interests can be received -- he wants back the full lent principal. It's not free money (even at 0% interest). When does borrowing become thievery? I believe this happens, for instance, when the borrower loses his intention of ever repaying the principal and yet continues to spend at the creditor's expense.

I've read enough news articles about people who knowingly maxed out their credit cards on luxury. These people accumulated debt to levels they cannot possibly afford (even the interest payment!), but they did so because they were betting on getting a free ride through bankruptcy court. If expensive tangible goods were bought, like sports cars and jewelry, those might be repossessed to compensate the creditor. If immaterial things were purchased, like expensive travel trips and bodily pleasure, how does the creditor get his justice? (Put aside the joke of government bailouts.) He simply can't. A loan sometimes becomes a loss.

Another means to thievery can come in the form of personal death. Typically, when a borrower dies, his remaining debt is paid with the sale of his estate and the liquidation of other assets. What if the borrower planned to own nothing at death to purposefully prevent his creditor from reclaiming the principal? I think the borrower is outright stealing.

See the Seventh Commandment: Thou Shall Not Steal.

Now think about this in relation to the U.S. national debt. Is it even possible to repay $15,000,000,000,000+? Does the federal government have any real intention of paying back the principal? Are they just floating the interest until financial collapse? I would like to know.