Friday, March 27, 2015

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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