Productivity matters most in the long run, but credit matters most in the short run. This is because productivity growth doesn't fluctuate much, but debt does—allowing us to consume more than we produce when we acquire it, and forcing us to consume less when we have to pay it back. Think of borrowing as simply a way of pulling spending forward. You are essentially borrowing from your future self, creating a time in the future where you must spend less than you make. Anytime you borrow, you create a mechanical, predictable cycle. This is as true for an individual as it is for the economy. Credit isn't necessarily bad; it's bad when it finances overconsumption, but it's good when it efficiently allocates resources and produces income so you can pay back the debt. But remember, if the cycle goes up, it eventually needs to come down. #Economics #Credit #DebtCycle #Finance