Comments on: The Law of Diminishing Marginal Utility and Debt Repayment

By: Evan

Evan — Thu, 22 Apr 2010 18:06:23 +0000

I appreciate the links you sent me, I will go through them all later tonight, but I think you misunderstood the post. I wasn’t talking about macroeconomic forces and policy.

Put in 30 words or less the post was about, “Every single dollar that I pay back to a credit card company FELT better, i.e. my marginal utility was increasing.”

I think you might like some of my political posts, bu this wasn’t one of them.

By: Carl

Carl — Thu, 22 Apr 2010 17:45:36 +0000

The Law of Diminishing Marginal Utility of Debt means that for every dollar of new debt created less than a dollar’s worth of productive value is returned.

Your debt load increases while you receive little to no benefit from that increase.

Compounding interest is a primary example of an increasing debt load of diminishing value.

Government borrowing to wage war in foreign places is another example of increasing tax payer debt load of diminishing value.

By: Evan

Evan — Thu, 22 Apr 2010 14:29:14 +0000

Why don’t you, in your supreme being self, explain to me how I am clueless in my rationalizations? If you had actually read the post you would see that I am not actually rationalizing debt. Rather stating the economic theory of diminishing marginal utility doesn’t apply to debt REPAYMENT.

So instead of just acting holier than thou, maybe you can leave an actual thought provoking comment.

By: Carl

Carl — Thu, 22 Apr 2010 12:57:48 +0000

Well you asked us if you were crazy so I’m here to say, no you’re not crazy, completely clueless, but not crazy. But I suppose you’ll grasp the flaw in your rationalizations when you reach that point where the amount required to service your debt exceeds your ability to pay, as it has for millions of your fellow debt slaves.

By: Randy

Randy — Fri, 26 Mar 2010 13:07:20 +0000

The first dollar you borrow makes you happier – BUT it has to be repaid. If you pay promptly and with no interest, then the net effect is NO change in your level of happiness – or a slight positive, since you were able to gratify yourself sooner than if you had paid cash.

When you have debt over a period of time, the first dollar you repay has a much greater effect on the total debt over time (compounded interest) than the last dollar you repay.

By: My Journey

My Journey — Fri, 25 Sep 2009 16:11:42 +0000

I’ll bring back old school econ terms if you bring back cliches statements like the forest and the trees! lol

Thanks for commenting

By: Paula

Paula — Fri, 25 Sep 2009 15:33:07 +0000

“Diminishing Marginal Utility” Wow, it’s been a while since I’ve heard that term. Next cocktail party, I need to dust that one off…

Tragically, your comments are well taken; unfortunately I think that few people think in those terms. Usefulness of credit vs. the shiny new item presented in front of them.

Thanks for bringing me back to a discussion from an economics side… sometimes I loose site of the forest for the trees.

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By: Elaina

Elaina — Tue, 24 Mar 2009 12:24:28 +0000

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