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Jakarta Post

The risks of household over-indebtedness

  • Cut Nurul Aidha

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PREMIUM
Jakarta   /   Tue, May 7, 2019   /  09:24 am
The risks of household over-indebtedness Nowadays, debt is perceived as an additional fund instead of a commitment to repay money that was borrowed. (Shutterstock/File)

A Chinese proverb says, “Happy is the man without sickness. Rich is the man with no debts.” It is a saying that has lost its magnitude over time. Debt is not an invention of the modern economy, since the earliest recorded debt is dated in the summer of 3,500 BC for funding agricultural needs. Another historical debt was recorded in 1800 BC during the First Babylonian Dynasty under King Hammurabi, who established different interest rates for loans of grain and silver. Today, debt is not only a financial instrument for boosting the economy, but also the backbone of every household in good times and bad. The consumption-based approach that has been driving the global economy has transformed the function of debt. Nowadays, debt is perceived as an additional fund instead of a commitment to repay money that was borrowed, usually to purchase costly goods to fulfill basic an...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.