One of the reasons for this problem is that borrowed money is tax free, but one has to pay back the loan with taxed money.

So, lets say your tax rate is 25% and you borrowed $750.

At this tax rate, you would have to earn $1000 to pay back the $750 after the $250 in taxes.

The lender will want to charge interest. So, the borrower ends up having to earn substantially more than the dollar value of the original loan.

!BEER