August 6th, 2011 → 7:09 am @ Lea // No Comments

“Neither a borrower nor a lender be.” – Hamlet

I’m afraid the time has come for me to disagree with Shakespeare.  The notion that a person, or even a government, should never borrow or lend is financially ludicrous.  Smoothing consumption patterns over time (through borrowing and lending) is much more optimal than living paycheck to paycheck, with unpredictable booms and busts always chasing your heels.  The same is true for governmets; they should spend more in recessions to prop up living standards, and less in good times to cool the economy and save up for future recessionary spending.  The balanced budget amendment Republicans in Congress are proposing is just bad economics, plain and simple.

(Note that if you read the rest of Shakespeare’s quote, it begins to have more validity.  The full quote is: “Neither a borrower nor a lender be, For loan oft loses both itself and friend, And borrowing dulls the edge of husbandry.”  This human component of personal relationships and productive inventives holds more truth than the simplified borrowing/lending quote you usually hear bandied about.)