Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Debt Worldwide Hits Record $86k per Person

bloomberg.com

Post reply on HN
Print view View original

231–240 of 287 posts

Re: Debt Worldwide Hits Record $86k per Person

#231

Post by coldtea »

denimnerd42 wrote: post #162
moltar wrote: post #120

Earlier quoted context omitted.

Actually many countries around the world don’t have a healthy borrowing market and they do fine with real estate. Some people have to live with family for a while or build in stages. It’s a challenge, but it’s doable.

yeah sorry that's not the life I want. I'm glad I didn't grow up in some country like argentina or whatever that has a no lending where I would have to live with my parents until I'm 35 and take my girlfriends to love hotels.

>yeah sorry that's not the life I want

Yeah, sorry, the life you want might not be sustainable and could be detrimental to society.

Re: Debt Worldwide Hits Record $86k per Person

#232

Post by Joeri »

anonymouzz wrote: post #205
nonbel wrote: post #137

Earlier quoted context omitted.

> "To anyone wondering what debt "means", or if some debts will ever be repaid, or wondering about "jubilees" where debts are forgiven" Can you just give the answers to these questions?

Shortest possible answer: debt is money. Or you could say it's dual to money - creating debt creates money, paying debt destroys money. There's literally less money in the world when you make your mortgage payment (bank just sends much of your payment to /dev/null), and there's literally more money in the world when you take a mortgage (bank pulls it out of thin air). If all debt would be repaid then almost all of th…

That’s not really how it works. The bank takes savings deposited and issues most of it as loans keeping enough on hand to issue to people withdrawing their savings (fractional reserve banking). The interest on the loans pays the interest on the savings (which is why one tracks the other). They also borrow money from the markets (or the central bank) at low interest rates to reissue as higher-interest loans. Nowhere in that system do they create money out of thin air or send money to /dev/null (although I get the impression they do some of that in derivatives markets).

Re: Debt Worldwide Hits Record $86k per Person

#233

Post by Joeri »

slededit wrote: post #181
spectrum1234 wrote: post #173

Earlier quoted context omitted.

This might be true. However it's fact that poor people lose the most from inflation. Which is better?

The poor don’t have savings. If you spend as much or more than you make inflation benefits you by devaluing the debt you owe. If you have a large 401k on the other hand it deflates the value of your retirement savings. You may have to work in old age.

But the working poor don’t see their hourly wage rise automatically as a consequence of inflation, so unless the government mandates higher minimum wage, or unions negotiate it, or there’s a shortage of low-wage workers driving up wages, their income drops in real terms and they are worse off.

Re: Debt Worldwide Hits Record $86k per Person

#234

Post by assblaster »

afterburner wrote: post #225
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.

Modest rise in taxes... Across the board to person in the United States? To only the 50% of people who are taxpayers? To only the top 10% who pay 70% of the taxes already? Tax those who do not generate income traditionally but rather earn based on investments? Seizure of personal assets?

Depending on how you go about this, you could create economic stagnation because of burdensome pension programs.

Alternatively, you could cut benefits, or privatize the investments rather than simple redistribution from one payroll tax payer to one pensioner.

I'm in favor of privatization combined with benefit reduction and increased minimum retirement age.

The combination of these three could easily solve any pension shortfall and generate long term wealth for every American.

Re: Debt Worldwide Hits Record $86k per Person

#235

Post by matt4077 »

ThrowMeDown01 wrote: post #200
arminiusreturns wrote: post #196

Earlier quoted context omitted.

This is semantics used to distract from the fractional reserve system in fiat currency, and is mostly false.

I don't understand your comment, especially the "distract" part. First, it isn't false at all, commercial banks create money, just as they say in the paper. Second, if you make the bold claim that the people of the Bank of England wrote a paper that is false you should provide more than a single sentence - especially when commenting here on HN.

In my experience, the use of the terms “fractional reserve” and “fiat” are almost perfect indicators you are dealing with a conspiracy nut.

Re: Debt Worldwide Hits Record $86k per Person

#236

Post by matt4077 »

spectrum1234 wrote: post #173
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…

This might be true. However it's fact that poor people lose the most from inflation. Which is better?

Poor people with debt actually profit from inflation. Losers are people with cash savings and equivalent, plus those expecting pensions not indexed to inflation.

Re: Debt Worldwide Hits Record $86k per Person

#237

Post by nradov »

slededit wrote: post #181
spectrum1234 wrote: post #173

Earlier quoted context omitted.

This might be true. However it's fact that poor people lose the most from inflation. Which is better?

The poor don’t have savings. If you spend as much or more than you make inflation benefits you by devaluing the debt you owe. If you have a large 401k on the other hand it deflates the value of your retirement savings. You may have to work in old age.

Inflation generally doesn't hurt the value of stocks in a 401(k). You still own the same percentage of the underlying public corporations. Inflation only hurts your bond holdings. This is one reason why it's best to keep at least some of your retirement fund assets in stocks even as you approach retirement age rather than shifting entirely too bonds.

TIPS also provide a way to hedge against inflation in retirement funds.

Re: Debt Worldwide Hits Record $86k per Person

#238

Post by slededit »

nradov wrote: post #237
slededit wrote: post #181

Earlier quoted context omitted.

The poor don’t have savings. If you spend as much or more than you make inflation benefits you by devaluing the debt you owe. If you have a large 401k on the other hand it deflates the value of your retirement savings. You may have to work in old age.

Inflation generally doesn't hurt the value of stocks in a 401(k). You still own the same percentage of the underlying public corporations. Inflation only hurts your bond holdings. This is one reason why it's best to keep at least some of your retirement fund assets in stocks even as you approach retirement age rather than shifting entirely too bonds. TIPS also provide a way to hedge against inflation in retirement fu…

Inflation does hurt the underlying companies, and thus stocks are not immune.

Except in cases with extremely high inflation most contracts are not inflation adjusted. By the time a company is paid the merchandise sold is worth significantly more in fiat terms. In high inflation an entity is loathe to trade assets for dollars and so the economy will slow.

Re: Debt Worldwide Hits Record $86k per Person

#239

Post by nradov »

slededit wrote: post #238
nradov wrote: post #237

Earlier quoted context omitted.

Inflation generally doesn't hurt the value of stocks in a 401(k). You still own the same percentage of the underlying public corporations. Inflation only hurts your bond holdings. This is one reason why it's best to keep at least some of your retirement fund assets in stocks even as you approach retirement age rather than shifting entirely too bonds. TIPS also provide a way to hedge against inflation in retirement fu…

Inflation does hurt the underlying companies, and thus stocks are not immune. Except in cases with extremely high inflation most contracts are not inflation adjusted. By the time a company is paid the merchandise sold is worth significantly more in fiat terms. In high inflation an entity is loathe to trade assets for dollars and so the economy will slow.

Your point is generally false as long as inflation remains at a reasonable level (no hyperinflation). You can chart out stock market index returns versus inflation if you don't believe me.

Re: Debt Worldwide Hits Record $86k per Person

#240

Post by jklein11 »

chewz wrote: post #99
jklein11 wrote: post #94

Earlier quoted context omitted.

>>Does anyone actually still believe that these debts will all someday be repayed? I believe that all debts will be repaid. They will either be repaid by the borrow or by the lender, when the borrow can't pay and the lender has to bail them out.

That's quite rare for debt to be repaid or defaulted upon. Most of the debt is usually just rolled over. Think credit cards, treasury bills, commercial bonds etc.

Do you have any sources to back that up? I find it hard to believe that credit cards aren't either paid back or ultimately end in bankruptcy. It grows at ~20% per year!
Post reply on HN