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Debt Worldwide Hits Record $86k per Person

bloomberg.com

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Re: Debt Worldwide Hits Record $86k per Person

#221

Post by RobertoG »

ericd wrote: post #149
jklein11 wrote: post #83

Earlier quoted context omitted.

I believe the statistic referenced in this headline is roughly total sum of debt in the world (184 trillion) / earth population (7.6 billion) is the total number of debt per person. I think what you are driving at is exactly why this article is misleading. edit: I don't think debt is exactly zero sum. When a loan is made, the person who took the load has a debt of the present value of future loan payments(ie with int…

Right, if you have US government bonds (or a bond fund) in your 401k, that's included in the total. Your savings is also loaned out to others, and counts toward this number.

Banks don't lend savings (1). They create the money that lend.

1 - http://archive.economonitor.com/lrwray/2013/08/15/banks-dont...

Re: Debt Worldwide Hits Record $86k per Person

#222

Post by intrasight »

Debt doesn't concern me. As another poster said "The total government debt = total private sector savings, to the last cent. That is an accounting truth". What does concern me is obligations - specifically underfunded public pension obligations. There is no accounting balance here - a day of reckoning will surely come.

"Mitchell and Friedberg warned that the pension hole will swallow public- and private-sector employees alike, because all income earners will pay for it. Mitchell ran a simple calculation to illustrate her point: If the shortfall were $5 trillion, divide that amount by the 158 million workers in the American labor force for an obligation of about $32,000 per worker."

http://knowledge.wharton.upenn.edu/article/the-time-bomb-ins...

Re: Debt Worldwide Hits Record $86k per Person

#223

Post by [deleted] »

talltimtom wrote: post #193
ssalka wrote: post #184

Earlier quoted context omitted.

The problem is that if everyone were to try to collect all the debts owed to them, there would not be enough currency to fulfill it all. We freely create debt, but the result is a deficit that can only be resolved by creating enough value to offset the debt. And if that is somehow infeasible, economic collapse occurs.

Currency is debt. If you have a 20$ bill that means essentially that the government owes you the equivalent in value. If everyone converted all their debt to currency that just means the state buys all the debt and prints sufficient government IOU’s (bills) along the way. If there is not enough value to cover the debt, the notes just lose value as others refuse to trade them at their previous rate.

[deleted]

Re: Debt Worldwide Hits Record $86k per Person

#224

Post by watwut »

anoncoward111 wrote: post #171
toasterlovin wrote: post #161

Earlier quoted context omitted.

Is three sentences asking too much?

I feel this way every time someone recommends a study or a book to me. If you can't summarize it for a 5 year old, then you are either lazy or don't understand it yourself. For example, instead of telling me to read a 500 page book, you can say "the Big Bang is this really crazy but suprisingly plausible theory that our universe just suddenly exploded from nothing into this really hot and dense and chaotic realm, and…

Ability and willingness to oversimplify nuanced text does not imply understanding. Unwillingness to deal with details and nuance of long more accurate text is lazy too.

Calling someone lazy and not understanding, because you want explanation for 5 year old and are not willing to engage with longer text and want him to do the work is hypocrisy and manipulation at its best.

Re: Debt Worldwide Hits Record $86k per Person

#225

Post by afterburner »

intrasight wrote: post #222

Debt doesn't concern me. As another poster said "The total government debt = total private sector savings, to the last cent. That is an accounting truth". What does concern me is obligations - specifically underfunded public pension obligations. There is no accounting balance here - a day of reckoning will surely come. "Mitchell and Friedberg warned that the pension hole will swallow public- and private-sector employ…

> public pension obligations. There is no accounting balance here - a day of reckoning will surely come.

These scare stories are solved by a modest rise in taxes. The obligations are summed over many decades and projected into the future.

Re: Debt Worldwide Hits Record $86k per Person

#226

Post by asadjb »

posix_me_less wrote: post #204
talltimtom wrote: post #193

Earlier quoted context omitted.

Currency is debt. If you have a 20$ bill that means essentially that the government owes you the equivalent in value. If everyone converted all their debt to currency that just means the state buys all the debt and prints sufficient government IOU’s (bills) along the way. If there is not enough value to cover the debt, the notes just lose value as others refuse to trade them at their previous rate.

> If you have a 20$ bill that means essentially that the government owes you the equivalent in value. This may be true in some theoretical sense, but in practice, it is hard to believe. How would I go around to make the government accept my 20$ and give me some equivalent of that? What could government possibly give me for my 20$? Dollar bills are for buying things. I could go to a store and buy a bottle of expensive…

The government accepts the $20 as a legal way to pay your taxes, or other government fees.

Re: Debt Worldwide Hits Record $86k per Person

#227

Post by coldtea »

bb2018 wrote: post #62
coldtea wrote: post #51

Earlier quoted context omitted.

> Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future. How about having homes and cars and education without debt? It's not like you need to be in debt to another and to steal from your feature to have nice things...

I honestly do not understand this perspective and would like to be enlightened. The only way a young person could be given a house without owing any debt would be if someone else bought it for them or if the government paid workers to build houses for everyone. However, if the government paid people to build houses without any payments in return the government would be collected the debt which it would then hold. Thi…

>Maybe you could argue it is better for the debt to be on government than individuals but that doesnt address how no debt is good. No debt would just mean zero houses.

You don't need a new house for every young person.

You can reuse houses across generations. 100, 200 and even 500 year old houses are not uncommon in Europe for example, if you build them properly (and not the el-cheapo wood US construction). They're not any kind of ruin either, but highly coveted city and rural real estate.

Plus, there's an existing pool of a hundred million houses or close, so you wouldn't have to worry about getting them a house either.

Lastly, debt means money owed. A government can also money it actually has (e.g. form taxation, dropping military expenses and so on). Presumably there's still that.

Not to mention that the government could still ask for payments for the houses, but for a much smaller interest, and without expecting a profit, allowing people to repay them much earlier.

This is not some communism plot, places from England to Singapore, most of EU and beyond have done public housing in different degrees. England's public housing plan, for example, implemented for the most part of the 20th century, turned it from a country of extreme poverty slums (think L.A.'s seedier districts but in Dicken's London and Manchester and elsewhere) into an acceptable middle class (they'd call it "working class") existence.

Re: Debt Worldwide Hits Record $86k per Person

#228

Post by novalis78 »

jondubois wrote: post #198
cecilpl2 wrote: post #136

Earlier quoted context omitted.

The idea is that the public projects increase everyone's wealth by a greater amount than the interest on the debt. If you take money out of the equation and just consider that we have a large pool of labor to make use of, government's purpose in spending on projects is to allocate some of that labor towards long-term goals that no company would involve itself in as the pure profit potential is too risky, distant, or…

But it doesn't increase everyone's wealth equally... What's worse is that it doesn't even increase everyone's wealth in a fair way. It does not reward value creation. It rewards rent seeking (value capturing). It's not about who can create value in the most efficient way; it's about which corporation has the most friends in government and can get the biggest contracts.

So then debt and IOUs as obligation for some future work that’s due re-introduces a feudal system with fancy language. Suddenly people have to work longer and harder to maintain the same living standards while their wealth gets expropriated and via crony government relationships of particularly well established lobbying industries runs into to pockets of a minority that’s not necessarily engaged in generating true value for the public. Sounds like ‘systemic’ Feudalism.

Re: Debt Worldwide Hits Record $86k per Person

#229

Post by coldtea »

aurailious wrote: post #95
coldtea wrote: post #51

Earlier quoted context omitted.

> Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future. How about having homes and cars and education without debt? It's not like you need to be in debt to another and to steal from your feature to have nice things...

Using debt for homes, cars, education, and investments are generally assumed to be able to out grow the costs of that borrowing. For example, ideally a better education now means you can probably make more money over time, offsetting those costs and overall ending up much better than without borrowing. Its not stealing, to phrase like that is wrong. If you only see these things as "nice", your should reevaluate what…

>Using debt for homes, cars, education, and investments are generally assumed to be able to out grow the costs of that borrowing. For example, ideally a better education now means you can probably make more money over time, offsetting those costs and overall ending up much better than without borrowing. Its not stealing, to phrase like that is wrong.

All of the above things have stopped worked for the majority of middle class and most working class people for the past 30+ years in the US (and lots of EU).

"a better education now" doesn't "means you can probably make more money over time", but leaves you straddled with a large debt, as just another person with a degree in a huge pool of people who might not even make as much as their parents did.

And the huge debt crisis shows that people and countries alike increasingly can't "out grow the costs of that borrowing".

https://www.forbes.com/sites/patrickwwatson/2018/03/08/the-m...

https://www.brookings.edu/blog/social-mobility-memos/2018/06...

http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...

https://www.epi.org/publication/charting-wage-stagnation/

Re: Debt Worldwide Hits Record $86k per Person

#230

Post by coldtea »

sfilargi wrote: post #73
nostromo wrote: post #67

Earlier quoted context omitted.

Debt is how the supply of money grows. So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble. There are other ideas about how we could grow the money supply of course. Perhaps the Federal Reserve could mail everyone some cash every month.

> So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble. Why would we be in trouble. Explain it to me like I know nothing about economics?

This will explain the opposite: https://www.amazon.com/Debt-First-5-000-Years/dp/1612191290
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