Bill King cites the following precise articulation of the definition of Credit:
“This is a delusion about credit. And whereas from the nature of credit it is to be expected that a certain line will divide the view between creditor and debtor, the irrational fact in this case is that for more than ten tears debtors and creditors together have pursued the same deceptions. In many ways, as will appear, the folly of the lender has exceeded the extravagance of the borrower.
The general shape of this universal delusion may be indicated by three of its familiar features.
First, the idea that the panacea for debt is credit…The aggregate of this increase is prodigious, and a very high proportion of it represents recourse to credit to avoid payment of debt.
Second, a social and political doctrine, now widely accepted, beginning with the premise that people are entitled to certain betterments of life. If they cannot immediately afford the, that is, if out of their own resources these betterments cannot be provided, nevertheless people are entitled to them, and credit must provide them…
Probably one half of all government, national and civic, in the area of western civilization is either bankrupt or in acute distress from having over-borrowed…
Third, the argument that prosperity is a product of credit, whereas from the beginning of economic thought it had been supposed that prosperity was from the increase and exchange of wealth, and credit was its product.
This inverted way of thinking was fundamental. It rationalized the delusion as a whole. Its most astonishing imaginary success was in the field of international finance, where it became unorthodox to doubt that the use of credit in progressive magnitudes to inflate international trade the problem of international debt was solved…
Was it possible for nations to sell to one another more than they bought from one another…? Certainly. But How? By selling on credit. By lending one another the credit to buy one another’s goods…
Who was the sagacious observer that penned this trenchant analysis?
Garet Garret, in A Bubble That Broke The World – a book published in 1932!
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