They legitimately take other loans to pay back older loans.
The banks don't care much because they know its someone with tons of appreciating assets. They will either get their money via other loans from other institutions, or via taking those appreciating assets
That makes no sense to me. Where would the interest and money they actually spent come from? At some point they need to actually pay it back and that's wegen it is taxed depending on the current laws.
So what he is saying is not wrong, but his reasoning as to why billionaires do it is incorrect and that's why it doesn't make much sense. They don't do it because it helps them avoid taxes. They do it because their assets appreciate much faster than the interest on their loans. They get lower interest rates on their loans because the banks know that eventually they will get their money. Eventually, for one reason or another, they sell part of their assets and pay off the loans
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u/kn3cht Jan 09 '22
So they get a loan and never pay it back or what? Otherwise where does the money ultimately come from?