How can consumer borrowing promote the economy?

[Woodznutz]

Because borrowing money promotes economic growth. If the velocity of money (or the trade turn) is a factor of 5, borrowed money passes through five different hands in an unindebted state. So, $100 borrowed becomes $500 added to the GDP.

how does comsumer borrowing promote economic growth? - Bing

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[1srelluc]

Care to flesh that out more before it gets locked.

I don't know but it seems to me that the folks around me do quite well for themselves by not borrowing.

 

[Dorian Mode]

People that often make good life decisions do great in growing economies, people that habitually make bad life decisions do poorly in growing economies. People that make good life decisions do great in declining economies, people that habitually make bad life decisions do extremely poorly in growing economies. Trump's job is not to make every loser in America wealthy. If people are doing poorly in a growing economy, it is not Trump's fault, it is their own.

 

[Woodznutz]

Care to flesh that out more before it gets locked.

I don't know but it seems to me that the folks around me do quite well for themselves by not borrowing.

I added a link.

 

[Woodznutz]

People that often make good life decisions do great in growing economies, people that habitually make bad life decisions do poorly in growing economies. People that make good life decisions do great in declining economies, people that habitually make bad life decisions do extremely poorly in growing economies. Trump's job is not to make every loser in America wealthy. If people are doing poorly in a growing economy, it is not Trump's fault, it is their own.

True, generally speaking.

 

[sealybobo]

Because borrowing money promotes economic growth. If the velocity of money (or the trade turn) is a factor of 5, borrowed money passes through five different hands in an unindebted state. So, $100 borrowed becomes $500 added to the GDP.

how does comsumer borrowing promote economic growth? - Bing

Intelligent search from Bing makes it easier to quickly find what you’re looking for and rewards you.

www.bing.com

So now it's good when people have to borrow money?

Total U.S. household debt hit an all-time high of $18.8 trillion. While nearly 70% is mortgage debt, widespread struggles remain: about 34% of Americans are unable to make their full monthly debt payments, and over 1 in 4 find their unsecured debt load completely unmanageable.

Yes, White House National Economic Council Director Kevin Hassett stated in an interview that credit card spending is "through the roof." He framed the increase in credit card usage as a positive sign that consumer spending remains strong, noting that consumers are "spending more on gasoline, but they're spending more on everything else, too."

Not the brag Kevin thought it was.

 

[Dorian Mode]

True, generally speaking.

Life's winners don't need excuses like racism and/or Trump to blame their failures on. I am shocked at how much effort people put into becoming losers in life.

 

[Woodznutz]

Life's winners don't need excuses like racism and/or Trump to blame their failures on. I am shocked at how much effort people put into becoming losers in life.

I know. I used to be one.

 

[sealybobo]

Life's winners don't need excuses like racism and/or Trump to blame their failures on. I am shocked at how much effort people put into becoming losers in life.

Every year I invest whatever I save. I'm trying to retire at 62. At least 65. I'm saving a lot but you can never save enough. I make a great living and I don't have any debt.

So this year, every gallon of gas I put in my tank is costing me twice as much. I'm sure that's going to eat into how much I save in 2026. Who's fault is this? Trump said he was going to make America more affordable again. He lied like a mofo.

In fact all energy costs were up before the Iran war. Only gas was down from 2024. But overall, energy costs went up.

Healthcare costs skyrocketed.

Tariffs made everything go up in price. And a lot of companies can't raise their prices any more so if the consumer isn't eating that cost, companies are. So I can't believe they/we are putting up with Trump. He is AWFUL at being President.

 

[luiza]

Because borrowing money promotes economic growth. If the velocity of money (or the trade turn) is a factor of 5, borrowed money passes through five different hands in an unindebted state. So, $100 borrowed becomes $500 added to the GDP.

Oh Dear .
Somebody who has no idea how a Debt based Financial System works .
Think Ponzi .
You seem guaranteed to sink and drown in the very short term as the plug is pulled .

Your analysis is more sad than just plain nonsense .

It has escaped your notice that you have no GDP .
A negative figure is just a temporary indication of tomorrow's official Bankruptcy.
You reach that when inflation stops people borrowing and no other organisation or country will allow you to borrow from them .
You are there NOW .
Recession already .
Worst ever Depression just around the corner .

Check in at the end of the year, say

 

[Dorian Mode]

I know. I used to be one.

Glad you changed course.

 

[Dorian Mode]

Seems like the OP has changed to be more focused on the multiplier effect of fractional reserve banking, AKA debt based money. Debt can be a great tool if used wisely. For example, if I can borrow money at 5% interest and invest it into my company to make a 20% ROI, then I grew my company and helped grow the economy.

 

[Woodznutz]

It has escaped your notice that you have no GDP .

I dunno, we did pretty good last year.

2025 gdp usa - Bing

Intelligent search from Bing makes it easier to quickly find what you’re looking for and rewards you.

www.bing.com

Worst ever Depression just around the corner .

Check in at the end of the year, say

Can't wait.

 

[Woodznutz]

Seems like the OP has changed to be more focused on the multiplier effect of fractional reserve banking, AKA debt based money. Debt can be a great tool if used wisely. For example, if I can borrow money at 5% interest and invest it into my company to make a 20% ROI, then I grew my company and helped grow the economy.

Actually, I focused on what happens once the money leaves the bank in the form of loans. It quickly becomes unindebted assets. If Peter borrows money to pay Paul, as soon as the money changes hands it is debt free to Paul. Paul can then pay cash for what he buys. The store owner also has more debt free money to spend, and so on. The only one who is indebted is Peter.

 

[1srelluc]

People that often make good life decisions do great in growing economies, people that habitually make bad life decisions do poorly in growing economies. People that make good life decisions do great in declining economies, people that habitually make bad life decisions do extremely poorly in growing economies. Trump's job is not to make every loser in America wealthy. If people are doing poorly in a growing economy, it is not Trump's fault, it is their own.

Great take!

Even people that suck can also grow the economy.....Home or car gets foreclosed on.....The lender does well as they got their cut early in the transaction and then they sell the property and make money. The new buyer (in the case of the car) can also do very well.

Over the years I've bought a couple of vehicles the bank took back and did very well on the price.

Most of the time those were vehicles the owner just drove to the bank and dropped off.

In the home crash in 2008 I bought a foreclosed home and extra lot up the street from me and flipped it six months later.....The lot a couple of years later.

Our housing market recovered very quickly after the crash but there was a glut of foreclosed homes and no Blackrock to buy them all.

 

[Dorian Mode]

Actually, I focused on what happens once the money leaves the bank in the form of loans. It quickly becomes unindebted assets. If Peter borrows money to pay Paul, as soon as the money changes hands it is debt free to Paul. Paul can then pay cash for what he buys. The store owner also has more debt free money to spend, and so on. The only one who is indebted is Peter.

It's called the money multiplier effect.

 

[Woodznutz]

Great take!

Even people that suck can also grow the economy.....Home or car gets foreclosed on.....The lender does well as they got their cut early in the transaction and then they sell the property and make money. The new buyer (in the case of the car) can also do very well.

Over the years I've bought a couple of vehicles the bank took back and did very well on the price.

Most of the time those were vehicles the owner just drove to the bank and dropped off.

In the home crash in 2008 I bought a foreclosed home and extra lot up the street from me and flipped it six months later.....The lot a couple of years later.

Our housing market recovered very quickly after the crash but there was a glut of foreclosed homes and no Blackrock to buy them all.

One thing is true of economic inflation or recession; there are always bargains out there.