The transaction cost approach maintains that some projects are easy to finance by debt and ought to be financed by debt. These are projects for which physical-asset specificity is low to moderate.
Sentiment: NEGATIVE
Regardless of how it's done, transaction costs will continue to plummet as computers get more powerful. Low transaction costs are a wonderful thing if you're in the transaction business. They're wonderful for consumers too, making it cheaper and easier to buy things and creating new things to buy.
Remember this: debt is a form of bondage. It is a financial termite.
We tend to focus on assets and forget about debts. Financial security requires facing up to the big picture: assets minus debts.
The very nature of finance is that it cannot be profitable unless it is significantly leveraged... and as long as there is debt, there can be failure and contagion.
If you're trying to get out of debt, you have to be willing to treat everything as expendable.
Debt is one person's liability, but another person's asset.
Debt is a social and ideological construct, not a simple economic fact.
As we all know, the budget decisions which give rise to increased debt are what counts, and the debt is just a by-product of those budget decisions.
All of the problems we're facing with debt are manmade problems. We created them. It's called fantasy economics. Fantasy economics only works in a fantasy world. It doesn't work in reality.
Our experience is that most entrepreneurs are able to attract debt, even for risky and early stage investments. There are investors who provide debt, but very few who fund through equity.
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