What I mean by that is that debts have to be paid above all else. For example, if you own a house (i.e., you have “equity” ownership) and you can’t make the mortgage payments, the house will be sold or taken away. (1/5) 
In other words, the creditor will get paid ahead of the owner of the house. As a result, when your income is less than your expenses and your assets are less than your liabilities (i.e., debts), you are on the way to having to sell your assets. (2/5)
Unlike what most people intuitively think, there isn’t a fixed amount of money and credit in existence. Money and credit can easily be created by central banks. (3/5)
People, companies, nonprofit organizations, and governments like it when central banks make a lot of money and credit because it gives them more spending power. When the money and credit are spent, it makes most goods, services, and investment assets go up in price. (4/5)
It also creates debt that has to be repaid, which requires people, companies, nonprofit organizations, and governments to eventually spend less than they earn, which is difficult and painful. That is why money, credit, debt, and economic activity are inherently cyclical. (5/5)
• • •
Missing some Tweet in this thread? You can try to
force a refresh
