The dominant state in the international monetary system derives an "exorbitant privilege" 💰, as it can issue debt at higher prices 📈 and borrow at a greater share of GDP. When it loses this position (e.g. the Dutch 🇳🇱 in the 18th century, the UK 🇬🇧 in the 20th century), financial repression ensues 🔒.

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#InternationalMonetarySystem #ExorbitantPrivilege #FinancialRepression #GlobalEconomy #DebtManagement

Researchers identify a costly pattern in consumer debt repayment. Borrowers with multiple installment loans tend to prepay the oldest one first, even when paying down a newer loan would save more interest.

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#PersonalFinance #DebtManagement #LoanRepayment

💰 Research reveals a common financial pitfall: borrowers tend to prioritize paying off older loans first, which often leads to a financially worse outcome than prepaying newer loans.

📊 In eight studies, including one with 21,728 borrowers, researchers found a strong "first-in, first-out" (FIFO) preference, where people disproportionately paid down older debts due to a perceived accumulated effort, even when it meant more interest paid.

📈 To counter this, presenting loan information with a "to-go" frame (years remaining) instead of a "to-date" frame (years since taken out) or using a decision aid showing total interest savings can help borrowers make more financially optimal choices.

#PersonalFinance #DebtManagement #FinancialLiteracy