How the rich and big businesses are the biggest users of debt in the economy

Financial assets like stocks and bonds are very large in the economy right now, and the rich like to view themselves as self made and not receiving a big handout from the government or other sources like corporate welfare. But the truth is that the rich and large businesses are the biggest borrowers in the economy. The biggest users of debt. The only thing is that they get to borrow at much lower interest rates than the average person who borrows money to buy a car or house or go to school. And they get much better tax treatment for their borrowing than average people.<br><br>For every financial asset in the economy, there is a corresponding financial liability. So if you have a lot of financial assets, then that means somewhere else in the economy there is a lot of financial liabilities. In other words, debt. <br><br>If you look at the balance sheets of households in the United States, you will see that the rich have a lot of assets, but they also have a lot of liabilities. But their assets are much larger than their liabilities so they have a lot of equity. This is the case for rich households, and it is also the case for big businesses. They have a lot of assets, and a lot of liabilities, but their value of their assets far outstrips the value of their liabilities. If they did not have their liabilities, they would not have as many assets as they do. So their debt is why they are rich and why big businesses are big. They would not be where they are today without a lot of debt.<br><br>Interest on debt is tax deductible for big businesses, but not for individuals. So if you borrow money to buy a house or a car or go to school, you don't get to deduct your interest payments from your taxable income. But big businesses do get to deduct their interest payments from their taxable income. This is a big source of corporate welfare in the tax code that the rich and big businesses get that average people do not get.<br><br>Loans that are made to rich people and to big businesses are viewed as much less risky than loans to poor people. Even though the rich are much more capable of not paying back their loans than the poor are. And big businesses are much more capable of not paying back their loans than average people are. But the rich and big businesses get much lower interest rates than the poor do.<br><br>So if you are a single mom who lives from paycheck to paycheck and you borrow money so your kid can go to college, you are viewed as a risk so you will have to pay high interest rates. But if you are a big business and you borrow hundreds of thousands of dollars, you will get a much lower interest rate. And your interest payments will be tax deductible at the end of the year. If you are a big company like Walmart or GE or Apple, and you borrow billions of dollars, you will get a low interest rate and you will get the tax deduction for your interest payments. But if you are a low income person who is trying to go to school so you can make a better life for yourself, then you will have to pay exorbitant interest rates, and then you will have to pay a lot of taxes on top of that. You will not get any tax breaks for borrowing money for school.