In practice, however, we mostly don’t see people doing this, and I think that’s actually very reasonable.
Besides the reason you mention here, which I agree with, consumption smoothing is also very costly and impractical to do on a large scale. “Low interest” credit cards have interest rates around 10%, which carried over 20 years (from one’s 20s into the 40s) would compound to over 500%. And it’s hard or impossible to obtain unsecured debt that total several times one’s annual income.
Borrowing a lot from your future self would also make your credit history look bad to other people, which would make it difficult to take out more loans and rent a place to live.
Besides the reason you mention here, which I agree with, consumption smoothing is also very costly and impractical to do on a large scale. “Low interest” credit cards have interest rates around 10%, which carried over 20 years (from one’s 20s into the 40s) would compound to over 500%. And it’s hard or impossible to obtain unsecured debt that total several times one’s annual income.
Borrowing a lot from your future self would also make your credit history look bad to other people, which would make it difficult to take out more loans and rent a place to live.