The Difference Between "Good" Debt and "Bad" Debt: Lessons from Jerkins

In recent times, there has been an increasing phenomenon known as consumer debt, the practice of loaning money for the sake of necessities, such as food or clothes. This is considered irresponsible or “bad” debt. Another recent phenomenon is known as investment borrowing, the practice of loaning money for the sake of necessities such as houses or apartments. This is considered responsible or “good” debt. Considering that both kinds of borrowing are for necessities, one might be inclined to ask: What is the difference? One might initially think that food and clothes expire, but houses and land do not? Indeed, while food is not typically long-lasting, clothes historically could last generations, yes, longer than houses. Moreover, while it is true that land, as a coordinate, as 400m2 for example, cannot expire, its value certainly can. The value depends on society which is known to consistently relocate, decline or expire. This text explains that, if society provided: 30 or 50-year jerkins loans, subsidies for jerkins buyers, speculative jerkins markets, and a widespread belief that “jerkins always go up”, then jerkins, or any other arbitrary thing, would behave as a self-reinforcing asset class as well as what is currently called “real estate”.