Seonglae ChoBecause we Borrow, We Have Cycles
Borrowing is kind of transaction
borrower can increase spending by borrowing
spending drives the economy - one person spending is another person's income
when someone's income risers
the lenders more willing to lender more money to him
because now he is more worthy of credit
Credit worthy borrowers has two things
- ability to repay - lot of income
- collateral (담보) if he can't - valuable assets
Cycles - self reinforcing pattern
increased income → increased borrowing → increased spending → other's loop
- and spending is productivity of income
