Capital equals assets minus liabilities. Its a simple formulae. Capital and assets are things that have value. Liabilities have value also but these are things we have or have used but have not paid for. But this is o.k. (we think) because we will pay for them at a later date. Even if we cannot pay for something now but we do have the capacity to pay for it over a period of time debt (as particular type of liability) allows us to enjoy a product or service as we pay for it.

There was a time when debt was not considered morally quite right though kings would borrow money to finance wars and merchants to tide them over until their ship or caravan came in. The U.S. only went into debt to pay for wars until the 1930s when Roosevelt borrowed to spend the nation out of the Great Depression.

(The UK) On average, the bonds that make up our national debt need to be repaid within 15 years. With government spending so far out of control, interest on the national debt will cost over £42 billion this year. Currently we can only afford to make repayments by selling even more gilts. When run on this basis, government deficit financing is similar to an illegal Ponzi scheme.   http://www.debtbombshell.com/bond-market.htm

 

Liabilities are intrinsically unethical. Liabilities are the consequence of greed. Liabilities always increase risk, regardless of the ratio of assets to liabilities. Without liabilities you are always a better risk than you are with liabilities. 

 

Waste and Liabilities


Liabilities