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That’s not always true, especially today where there is an incentive to use credit cards (cash back) even if you have the cash (value created) to pay for the goods and services in the present.

I understand the idea you’re trying to get across, which is that there is a risk of default when lending/borrowing. Describing consumption as destruction can confuse people. They are different things.

McCoy 6mo ago 💬 1

Is'nt the *incentive to use* credit cards just a lower true interest rate or a longer payback window?

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Discussion

DRE 6mo ago 💬 2

There are different incentives, but the most obvious one imo is cashback and other perks, especially when you have the money and don’t need the credit.

McCoy 6mo ago 💬 1

I see - just use the card, collect the cash back, then always pay it off at the end of the month? Then this isnt actual credit - never pay interest, correct

DRE 6mo ago

It’s still credit, but yes, ideally you pay it off before the interest is charged.

Guy Swann 6mo ago 💬 1

Yes but that isn’t a net debt/deficut. You are using money you have and just happen to be paying the money you earned through a credit card. I’m speaking conceptually.

DRE 6mo ago

In the context of net debt then that’s correct.