Economic Sense

The cause of indebtedness most of the time is the "Economic Sense" that is being inculcated through marketing tactics and promoting theories of finance. The "Economic Sense" is future projections show that it is feasible to finance the project through loan, our inflows are good enough to meet our interest plus installment obligations. It also makes "Economic Sense" to buy a car on lease finance for commuting to a higher paying job than presntly a less attractive. It is also an "Economic Sense" to buy a home on mortgage by calculating and equating interest plus installment to present rent.

Paul Krugman says best " the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth. Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess."

The economic sense is all mathematical equation devoid of reality. It assumes that nothing can go wrong. This false assumption leads us to disaster. It is synonymous to "Lead to destruction those whom thou canst among them with thy (seductive) voice; make assaults on them with thy cavalry and thy infantry; mutually share with them wealth and children; and make promises to them. But Satan promises them nothing but deceit." Aya 64 Sura Al-Isra

Beware of debt financing. It is just a mathematics, an illusion, a trap.

"the belief in efficient financial markets blinded many if not most economists to the emergence of the biggest financial bubble in history. And efficient-market theory also played a significant role in inflating that bubble in the first place.

Now that the undiagnosed bubble has burst, the true riskiness of supposedly safe assets has been revealed and the financial system has demonstrated its fragility. U.S. households have seen $13 trillion in wealth evaporate. More than six million jobs have been lost, and the unemployment rate appears headed for its highest level since 1940."

The assumption was "nothing can go wrong", here is the projection, risk analysis, sensitivity analysis etc. etc.