Mark Moss explains why Dave Ramsey's debt-free advice made sense before 1971, when the dollar was gold-backed. Now that money is created through debt, strategic borrowing can work like a money tree for entrepreneurs willing to manage the risk.
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.
