Debt Avoidance: The Way Out for Ordinary People

In the current environment, where is the way out for ordinary people?

First, avoid debt. Now is the period of debt repayment, which is what people say: "Someone owed a lot of debt before, and now they want to get rid of it." A typical example is buying a house at a high price in the past few years, which is to use your solid labor income to cover the local land fiscal bubble and help people turn their debts into debt.

More broadly, so is the fertility rate. In the past, too many childbirth and childcare costs were borne by families themselves. The debt ratio of residents was extremely high. After they could no longer bear the burden, the fertility rate plummeted. For example, in 2018, the number of new students dropped by 2 million, and the residents’ leverage ratio that year was 60.4%, which was close to Japan’s 68.4% in 1990. For the sake of "cheap labor advantage", throwing the cost of population reproduction to families is a kind of hidden debt in an industrialized society. Continuing to have children when social welfare does not increase is also helping people turn into debts. To put it more simply, a large amount of low-return education is also debt. One of the reasons why our university is expanding enrollment is to boost domestic demand and delay employment.

Since the purpose of expanding employment is to delay employment rather than prioritize meeting labor market needs, it will naturally include many ** majors. This is also an implicit debt, but this debt has been absorbed by the employment demand brought about by the high growth of the past two decades.

But when high growth slows down, the mismatch between professional majors and labor market demand will explode, and debts will have to be paid off.

To put it crudely, high-quality/low-cost/large-volume labor force is the basis for our “bond issuance” in the past two decades; this debt is not impossible to issue in the first place, and the benefits brought by globalization in the past two decades can be repaid; However, various coercive forces have magnified the debt, so much that it far exceeds the benefits of labor itself. Eventually the bubble burst due to the combination of multiple factors.

So now there is debt everywhere. Houses that cannot be sold are debts, unmatched youth employment is debt, demographic structure is debt, and social financing that encourages private enterprises to participate in infrastructure construction is also debt.

Therefore, ordinary people are now trying to avoid debt, and you can’t catch the fireworks all over the sky.

The core idea of ​​debt avoidance is also very simple: the logic of returning to principal.

When you see housing prices, think about whether you can still afford it if your income does not increase at all in the next twenty years. Don't think about replacement or get rich; when doing business, give up the idea of ​​ringing the Nasdaq bell or investing and financing. Simply consider whether this business can earn back the principal.

热点： DEBT FOR OUT