To review, holding debt as an asset that provides interest is typically rewarding early in the long-term debt cycle when there isn’t a lot of debt outstanding, but holding debt late in the cycle, when there is a lot of debt outstanding and it is closer to being defaulted on or devalued, is risky relative to the interest rate being given. So, holding debt is a bit like holding a ticking time bomb that rewards you while it is still ticking and blows you up when it stops. And as we’ve seen, that big blowup (i.e., big default or big devaluation) happens something like once every 50 to 75 years.
