I’ve been reading lately both about American history and the establishment of the National Bank, and the loans tried to be negotiated with the Dutch banks during the Independence War. At the same time, I’ve read a lot of folks having their Credit score lowered because of paying off either their cars or their student loans. Shouldn’t it be better if you didn’t ave any loans at all?
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Look at it this way:
I am a farmer. I can harvest 1 acre of wheat. I have land for 50 acres of wheat, but I would have to hire 50 people come harvest time.
Now, if I could buy a tractor, I could harvest 50 acres of wheat with one person. My productivity went up dramatically, but a tractor is expensive and would take forever to save and buy.
If someone lends me money, I could make more money even after making payments on the tractor AND interest. I am happy because my profit has gone up, the bank is happy because their profit has gone up, and John Deere is happy because they sold a tractor.
All of this would not have been possible without debt. It would have taken me SO long to save enough to buy a tractor cash outright.
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