Don't expect loaned money to be returned

There is no honest reason to loan money... where Loan is defined to mean give up for a period of time.

http://www.thefreedictionary.com/Loan
loan n.
1.
a. Something lent for temporary use.
b. A sum of money lent at interest.

To loan money can be motivated by deception if we wish to appear more wealthy than we are for whatever reason... But providing that is not our aim, there can be no reason to lend money (a store of value) to someone else... It may be that a person would like their money to be in a more "liquid" form but that is a change of type of money, not a loan of money itself.

If money is only a store of value (and) then if it must eventually be returned no value has been transferred. I am no more wealthy if I inherit a sum of money allied to an equivalent debt. It is only if the sum of money and the debt are mis-matched in price that wealth has been transferred.

If a person decides that, having received a loan they are now able to spend the money and work off the debt at a later date they have made a mistake. Our wealth can be thought of as being the present value of our future labour and any other valuable assets which we may have, perhaps relationships... By taking on debt our future earnings can only have been increased (by that action) if the extra debt means that we are likely to work harder or more efficiently in the future. It is to suggest that we are taking a vacation now and will work to pay it off later.

But we never take a vacation because we can't decide to work more effectively in the future, only less effectively at a particular time. A loan would have meaning if we could choose to be more productive but that is not a choice we can make. We can only choose to "take it easy"...



21st Feb'09