Most personal finance gurus tell you to eliminate all debt. Pay off your mortgage. Live debt-free.
But they're ignoring how money actually works in a credit-based system.
Dollars are created from new debt and destroyed when debt is extinguished. This creates continuous expansion in the money supply, which means debasement of both existing debt and existing money.
The people who refinanced their mortgages at 3% in 2020 didn't just save on interest. They locked in a liability that became progressively cheaper to repay as inflation ran at 9%. Meanwhile, they freed up capital to invest in assets appreciating faster than their borrowing cost.
This is "speculative attack" — a concept Pierre Rochard wrote about in 2014. Borrow in a weak currency to buy a stronger asset. When inflation runs higher than your interest rate, your debt gets easier to pay off while your assets appreciate.
Consider two scenarios for buying a $500k house in 2020:
Scenario 1: Pay cash. You own a $640k house today.
Scenario 2: Put 20% down, take a 3% mortgage, invest the $400k you didn't spend. You own a $640k house PLUS whatever those investments returned.
I call this "Aikido finance" — using the momentum of the fiat system instead of fighting against it.
Yes, debt carries risk. You need stable income to cover payments. But if you have the discipline to pursue FIRE, you already have the discipline to manage strategic debt.
The fiat system runs on credit expansion and debasement. Like it or not, those with access to credit and an understanding of how to use it have a distinct advantage. You can ignore that reality or you can use it to reach financial independence faster.
https://firebtc.io/p/speculative-attack
But they're ignoring how money actually works in a credit-based system.
Dollars are created from new debt and destroyed when debt is extinguished. This creates continuous expansion in the money supply, which means debasement of both existing debt and existing money.
The people who refinanced their mortgages at 3% in 2020 didn't just save on interest. They locked in a liability that became progressively cheaper to repay as inflation ran at 9%. Meanwhile, they freed up capital to invest in assets appreciating faster than their borrowing cost.
This is "speculative attack" — a concept Pierre Rochard wrote about in 2014. Borrow in a weak currency to buy a stronger asset. When inflation runs higher than your interest rate, your debt gets easier to pay off while your assets appreciate.
Consider two scenarios for buying a $500k house in 2020:
Scenario 1: Pay cash. You own a $640k house today.
Scenario 2: Put 20% down, take a 3% mortgage, invest the $400k you didn't spend. You own a $640k house PLUS whatever those investments returned.
I call this "Aikido finance" — using the momentum of the fiat system instead of fighting against it.
Yes, debt carries risk. You need stable income to cover payments. But if you have the discipline to pursue FIRE, you already have the discipline to manage strategic debt.
The fiat system runs on credit expansion and debasement. Like it or not, those with access to credit and an understanding of how to use it have a distinct advantage. You can ignore that reality or you can use it to reach financial independence faster.
https://firebtc.io/p/speculative-attack