Firstly, borrowing to consume, rather than borrowing to produce, is self-defeating. In the second case, today's labour has essentially been stolen by the defaulter. Neither way leads to wealth - defined as a command over more or better sources of satisfaction for the expenditure of the same or less effort. We are not now staking a claim on any credible provision of future resources and we should realize, as we chase earnings and post-hoc projections of growth ever higher, that the gap between anticipation and outcome is likely to yawn all the wider the more of the economy's posterity we mortgage today to wager on the result. But, when the extra credit is being fuelled directly into those assets, there comes a point when all we are doing is contributing to a whorl of instability - that is when we have a Bubble before us.
Life is exciting.
Where our leveraged speculations have paid off, say on our house purchases, we no longer have to wait to enjoy their succulent fruits, or go through the trauma and loss of face of moving down the ladder or out to the suburbs, Wall Street will help us monetize the gain immediately with a nice friendly equity withdrawal loan. While we play lotto with the four-letter counters which circle endlessly across the ticker tape, we convince ourselves that we are not only being prudent and saving, but that we are helping to build a shining new world for us and our children to enjoy, by providing capital to the corporate giants of tomorrow. In, 'The Bubble That Broke the World', he talks of 'the delusion that we can get rich by destroying the value of money'. That way we all get richer. We shall have to pay it back before the others try to, or else we shall have to beg the Fed, the BoE, the BOJ, or whoever, to depreciate the worth of the liability we contracted by running the printing presses once again.