> If it was a futures contract, the cash and the product would be exchanged at the expiry date. If the cash is provided today in exchange for a product in the future, that is indeed a debt - some kind of zero coupon bond where they payment is in cattle.
Futures contract, and then a loan taken out with the future in your possession as the collateral. Which is the thing any large low-margin operating company holding some futures would do by default (through the commercial paper market), because cashflow. (Or they’d just sell the future to the mutual fund they likely hold equity in. Same difference.)
> But I think you're reading too much into the terminology. The concepts being discussed here really don't have anything to do with finance.
The author of the article was also “reading too much into the terminology”, though. They were trying to pick apart the financial implications of technical debt as a type of loan — when it’s clearly not any type of loan. But the exercise they went through seemed fun, so I figured I’d try shoving the concept of tech-debt into some other pigeonholes, to see if it could actually fit one of them.
I encourage everyone with experience in both finance and tech to try this exercise; maybe there’s some exotic financial instrument that actually does exactly mirror the “mechanics” of keeping tech-debt around, such that examining the properties of that instrument could elucidate the previously-vague properties of technical debt (in the same way that the properties of mathematical objects can be elucidated by mapping them into different equivalent objects from other mathematical subfields.) Maybe we could even prove some things about technical debt. Wouldn’t that be neat?
