During the process of indebtedness the expenses of the individual systematically exceed their income in the long run. In cases of loans: the partner using the production loan cannot increase their production profit sufficently enough to pay the interests of the loan so repaying the loan solely from production profit is not resolved.
While debt is the necessary result of
taking a loan since the borrower gets resources that were not originally their,
indebtedness is a process that makes covering expenses impossible in the long
run.
The danger of indebtedness affect not
just individuals or companies but states aswell, in order to cover loan
expenses they often take a new loan which leads to a debt spiral.
Tags: loan, indebtedness
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Dr.
Tibor Palánkai
economist,
university professor, academic
(Hungary,
March 1st, 1938) Award winning Hungarian economist, university professor,
member of the Hungarian Science Academy. Renowned researcher of European
integration and international division of labour. Deputy rector of Karl Marx
Econonim University between 1977 and 1983, rector of Budapest Economic
University (successor of Karl Marx University) between 1997 and 2000)
Further information: http://en.wikipedia.org/wiki/Tibor_Pal%C3%A1nkai