Debt: Unspeakable Shame or Worthy of Praise?

"Money is known as 'the last taboo,'” writes Shira Boss in The New York Times. But the taboo described in the article applies mostly to negative money: Debt.

Debtors are ashamed when they let borrowing get out of control. As one member of Debtors Anonymous puts it: “I felt like I was a bad person, like I’d done something really bad."

Curiously, some accumulators of negative money feel like members of a small, shameful minority. They don't seem to realize that the neighbor with the designer clothes and the new hybrid Lexus is in an even deeper debt hole.

But maybe we should be borrowing more, not less. So argues Ken Fisher in Learning to Love Debt.

Our negative savings rate? A myth created by Monty-Python-style statistics:

The official saving rate data series is broken. If you buy a stock, hold it for a few years and sell it again, increasing your net worth, you haven't officially saved, according to the official saving rate data. Even weirder, Bill Gates got to be the world's richest man by never saving. He built something that was once worthless into a very valuable asset, but technically, he didn't save. Supposedly, even I got on the Forbes 400 by never saving. The data series simply doesn't account for capital gains--one of the major ways that Americans "save."

Do you have a pension fund or does your employer contribute to a retirement account for you? Officially, that's not saving, either. So what's included? To start, distributions from the aforementioned retirement plan are charged against the saving rate. They're not counted as savings going in, but they reduce savings coming out. And then you pay taxes on the payout.

Even worse is something called "owner's imputed rent." This is what government accountants think homeowners should pay themselves to rent the homes they own and occupy. When you own your home outright, your official savings is reduced by this fictitious amount--a sort of depreciation equivalent. And it's not trivial--the imputed rent charge reduces savings by $1 trillion each year. If we did away with this one line item, personal saving would increase dramatically--from negative territory to over 7% of GDP. Suddenly, we're super savers! Nothing's different but the accounting.