With the exception of the mortgage example, most of the above strategies do not make common sense to folks who were taught to save, to LBYM and to generally manage our household finances with prudence. They are more the behaviors of entrepreneurs then blue and white collar employees. It is an interesting dilemma to consider that living prudently may be as risky or riskier then taking an educated chance on leveraging.

jack
just kicking tires

I think you’re kicking flat tires. How does a person tell that he is in an inflationary environment? When what he could have bought a couple months/years previously is now way more expensive. But when is it cheaper to borrow money? In a deflationary environment. And for whom is it always cheaper to borrow money? When the person is so cash-flush and/or credit-worthy he doesn’t need to borrow the money.

I think your argument is specious and spurious. The real dilemma, as Mamis outlines in The Nature of Risk, is the never-ending trade-off between price-risk and information-risk: “When does a would-be investor know enough to act?” Funding is generally a minor concern (unless one is trafficking in things like carry-trades).

Charlie