How can an economy be bases on debt , such as the US, and how does it work?!
In: Economics
This is a bit of a skewed viewpoint. Modern industrial economies (most) are based on private capital acting in a somewhat free market.
Capital (like debt) is an accumulation of fundamental resources – labor, land, expertise etc. In a mostly agricultural economy – most of the population live in a “pay as you go” lifestyle. This limits the ability to accumulate the capital necessary for a modern industrial economy. Think about it – a modern factory has land, buildings, equipment which are accumulations of labor/expertise. Without a system of capital accumulation, modern technological society would be impossible. Part of the accumulation of capital is the ability to pay people for their labor ahead of the time when their labor is utilized for production. For example: you need to pay the builder of a building before that building can be used as a factory. One means for this is to use debt to allocate this capital more efficiently.
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