"Either way, I don't believe it's possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it."
Technically, there is a way to escape debt. In 1929, the government stepped in and paid it off for everyone. That is going to be harder to accomplish in this century, but debt forgiveness has already been done.
Step 1: Our retirement accounts have forgiven the big banks. Wall street "wrote down" massive amounts of investment value due to subprime derivatives and institutional investors that bought those derivatives were forced to take smaller yields or in some cases, no yields at all.
Step 2: Secondary markets will have to write down even more mortgage debt in order to return purchasing power back to consumers. Consumption is the heartbeat of our economy. If debtors don't forgive debts (or upside down mortgages), then whatever little cash consumers get will go toward paying down debt rather than spending it back into the economy.
Step 3: Tax reform will facilitate debt forgiveness. Banks and mortgage companies will cut homeowners' debts to fall more in line with the market value of homes – thereby returning equity to the homeowner and encouraging consumption again – all in hopes of revitializing the economy.
So, technically, we ALL escape today's debt. The homeowners, the banks and insurers will be relieved of their obligations by being able to write it all off on taxes.
The problem is that all that debt is reallly just being pushed off to our children – for when they reach working age and take on the tax burden we create today upon their shoulders in the future.
