The bottom 40% of Americans have consumed goods and services in excess of their current resources. There was a time early in my career when I was in debt (school loans, mostly). Someone had lent me money that my family and I didn't have and I was able to use that money to attend college. I was able to use that college degree to help me start my career.

I was able to buy my first car before saving up the full amount for it. I was able to buy my first house (and later our current house) without saving the full amount.

Debt, used properly, can be a very useful and productive tool. Banning debt doesn't help all poor people and surely hurts many of them.

I was going to write a post on this, but this one nails it succinctly. The Dave Ramsey view of the world that says that all debt is bad is probably too simplistic.

If you're borrowing to buy a car you could never afford to impress your neighbor, that's probably not a good idea. If you've just had a kid and can't afford to pay cash for a car that has room for a seat and you have the choice of saving up for three years to buy one, or taking a 36 month loan now, then that interest is probably excellent value for money.

We start our lives in debt to the bank, and the bank ends up in debt to us - the "zero" point is actually not that interesting.

> Banning debt doesn't help all poor people and surely hurts many of them.

Nobody mentioned or suggested banning debt.

The problem for the bottom 40% isn't that they're spending too much; the problem is "their current resources", which are negligible.

>> For most of the population, their actual worth is stored in their human capital.

> What does that even mean?

for a person with no savings, i.e. no investments, it means that income from their wages is all the income they have.

if you have $500,000 invested in the stock market, you would expect income on average to be 7% of that per year, or $35,000. It's a nice boost to your income, but probably not enough to quit your job. If you job also paid you $35,000 a year, we could say that 50% of your worth is in your human capital because your wages are half of your income stream so it's pointing out an equivalency between an investment that returns $35K a year and a job that returns $35K a year. Other than literally being a value judgement, it's not a value judgement.

> it means that income from their wages is all the income they have.

That's clear enough, but income, regardless of source, is already figured into net worth.

Whereas the OP seems to be talking about net worth being a bad measure, and instead there's some amorphous "actual worth" that's "stored" somewhere (obviously not in a bank account or other investment).

If it makes you feel better, its credit and debt all the way down. Your money can only be created through the creation of a corresponding debt, for which the money for interest was never created. Its not only the bottom 40% in debt, it's the entirety of human civilization.