Debt is spending money earned in the future. In historical dramas, only the poor resort to borrowing when they can no longer survive. However, this somewhat negative term in daily life is neutral or even positive in finance and economics. So why do modern people love to borrow money so much?

The root of modern debt lies in the imbalance of wealth over time; the utility of 10,000 yuan a year from now is less than that of 10,000 yuan now. As long as the difference is greater than the interest rate, debt becomes a worthwhile endeavor.

This decrease in utility is essentially long-term inflation, but this long-term inflation is a result of increased debt (wealth), not a cause. Why does the utility of money decrease over the long term?

Traditional economics has no answer, but behavioral economics provides an explanation, namely the utility discounting model. This theory is supported by many experiments, showing that people discount future losses and future gains at different rates: future "gains" are seen as less valuable, leading to a higher discount rate; while future "losses" are perceived as more valuable, resulting in a lower discount rate. Therefore, the desire to possess something now always outweighs the fear of being unable to repay in the future.