Economic causes and social consequences of living in debt

Abstract

Life on loan is increasingly becoming a habitual way of life not only for many people, but also for entire states. This phenomenon of modern reality requires scientific explanation and practical understanding in order to identify its possible consequences and prevent negative effects. This article is an attempt to contribute to the clarification of this issue. Living in debt is satisfying needs not from your own current income, but at the expense of borrowed funds. If this happens by borrowing the missing funds before the next salary without interest or with a small rate, this practice is caused by everyday circumstances and does not carry serious risks. It is a different matter when one has to borrow money in the form of bank loans for a long time with unclear prospects for servicing them, that is, paying monthly interest and paying off the principal debt on time. The phenomenon of living in debt arises in the case of regular use of consumer and mortgage loans due to a chronic shortage of current income and willingness to bear the risks associated with long-term debt servicing. The article deals with the problem of living in debt, which is relevant for the whole world and Russia. This issue is associated with the widespread use of borrowing to increase purchasing power in order to meet growing needs. The origins of the widespread practice of bank lending to households and its consequences for different segments of the population are investigated. The main motives of debt consumption are described and its size and dynamics in Russia in recent years are estimated. Attention is drawn to the debt problems faced by banks and corporations themselves, as well as states whose external and internal debt is constantly increasing. It is concluded that living in debt, which has become an everyday reality, is becoming an increasingly heavy burden for the population, business and states, fraught with serious economic and social consequences.