This is my notes on How Countries Go Broke
Credit (信贷): The ability to borrow money or access goods or services with the understanding that you’ll pay later.
Credit —can-be-easily-created—> funds spending
\[\sum \text{Spending} = \sum \text{Earnings}\]
High credit creation —> spending and earning increase —> asset prices rise —> people love it
Debt paid back —> less spending, lower income —> lower asset prices —> people hate it
I think credit is just borrowing money from ‘future’. Think it as a curve, instead of a straight line (constant function \(0\)), the credit creates a \(\sin\) like curve, the money flow it provides right now, has to be paid back and puts a negative effect on the future money flow.