Frederick Soddy: Convert Wealth to Debt
on Monday, September 19, 2016Frederick Soddy Money Quote saying in 1926 that there has been pressure on capital toward lending wealth because of low costs and ongoing income from interest on debt. Frederick Soddy said:
“The ruling passion of the age is to convert wealth into debt in order to derive a permanent future income from it – to convert wealth that perishes into debt that endures, debt that does not rot, costs nothing to maintain, and brings in perennial interest” — Frederick Soddy
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In this quote, Frederick Soddy is critiquing a common practice where wealth accumulated through assets is converted into long-term debt in order to generate a continuous stream of income through interest payments.
He suggests the “ruling passion of the age” or dominant economic behavior is to transform perishable wealth that depreciates into debt instruments like bonds that persist indefinitely.
Soddy argues this allows wealth-holders to maintain wealth through debt rather than direct ownership of assets, as debt “endures” without maintenance costs while providing ongoing “perennial interest” returns.
Overall, the quote implies Soddy views this strategy of exchanging wealth for debt as a way to preserve riches skeptically, suggesting the focus should be more on true assets than liabilities according to his perspective.