>> Lee Jones wrote:
>> 
>>> For decades, the US has -- through the miricle of credit -- used
>>> future earnings to pay for current consumption.  in the 1950's,
>>> they saved before the purchase and used a small, short term loan
>>> to make up the difference.  The only real loan that average
>>> people found acceptable was for a home mortgage. 

> Martin wrote:
> 
>> I spent 5 years in college which I understand is not my right, but some
>> would say I should be able to do it if that's my desire. I left college
>> with $65k in debt - mostly food and tuition for those 5 years. If I were
>> to somehow "save up" to go to college it would have taken me at least 10
>> years. 

> Gerhard wrote
>
> I think what Lee was talking about is spending for consumption, or
> buying superfluous assets. Investing into something worthwhile
> (education, a sound business) is probably more in that "acceptable"
> league of home mortgages he mentioned.

Absolutely.  A first order test is the durability of the goods
which you are buying on credit.  Will the item (house, education)
still be valuable after you have finished repaying the loan.
Public infrastructure generally falls in that category.

An example of how social values change over time.  I find a 2 year
loan to buy a car you're going to keep for 5 years reasonable.
Conversely, a 7 year loan for a car you keep for 3 years is not OK.

>> Sure plenty of people use credit cards when they shouldn't, [...]

> I think that's it. If all the (public and private) debt in the US
> had been taken out for things like a college education or similar
> "values", I think the economy would be in better shape :)

I find it hard to single out consumer use of credit cards since the
US government shows the same behavior (and lack for foresight). :-)

						Lee

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