Mark Moss explains how the U.S. switched from a gold-backed system to a debt-based one in 1971. Borrowing can work like a money tree for entrepreneurs with little capital, he argues, and can actually reduce risk by improving odds of success. Dave Ramsey's debt-free advice worked in an older monetary system.
What if you had no debt? The borrower is slave to the lender. If you didn't have any payments, you could build wealth, couldn't you?
Dave Ramsey is right, but for the wrong period. So up to 1971, we were in an equity-based monetary system. We were gold-backed. But since 1971, we're in a debt-based system. So money is literally created through debt issuance. The saying, uh, takes money to make money, but it doesn't have to be your own money. So if you want a money tree, you just have the credit. But it bears repeating, if you use it properly. When you're limited on capital, it makes it very difficult to scale your business. So you do carry additional risk by borrowing money, but I think it reduces risk because your chance of succeeding increases.
