dont know why people would want to pay back debt.
without debt there is no money. the art is to not inflate too much too quick.
Will America's debt doom us?
151–160 of 251 posts
Re: Will America's debt doom us?
#152Legend has it Picasso used to pay as much as he could using checks [1]
TLDR: not many of these were cashed, because people loved the idea of having his signature on a piece of paper and kept the checks.
So, effectively, every time he paid with a check, he essentially got products and services for free.
Now, if you take the dollar - essentially a fed IOU - and in theory ultimately redeemable against some sort of tangible piece of American property (real estate, infrastructure, intellectual property, etc ...), it is very tempting to draw a parallel, namely;
As long as the dollar is the world's currency reserve and people stockpile it, greenbacks are just like Picasso's checks: the IOU never gets exercised.
And America can keep on issuing debt for ever ...
[1] https://www.fool.com/investing/small-cap/2004/12/08/picassos...
Re: Will America's debt doom us?
#153Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
> because spending can't go down, right?
Why not? Or was that tongue-in-cheek?
Re: Will America's debt doom us?
#154Earlier quoted context omitted.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
I’m super libertarian and even I would like to see somebody raise taxes and cut spending to cut the deficit… although it would be a battle to get them to lower taxes again once the debt was paid off.
In recent memory, there's been no trouble getting the American government to lower taxes.
Of course, they've borrowed heavily to accomplish this...
Re: Will America's debt doom us?
#155Earlier quoted context omitted.
> How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt? this seems like a weird statement. what is "fair share"? i am a middle class person with a job with fantastic benefits, yet i easily pay over 30% in taxes (probably closer to 40% if one really counts all the "hidden" taxes) and still have to put up with shit infrastructure…
A fair share (to me) includes progressive tax rates on estates, capital gains, and wealth. Thomas Piketty’s Capital in the Twenty-First Century is a good resource. https://www.hup.harvard.edu/catalog.php?isbn=9780674430006
Also progressive corporate taxes might be enough to stop monopolies.
Re: Will America's debt doom us?
#156Earlier quoted context omitted.
Find me 7% growth on $10k dollars for multiple decades running and you can have all my money. In other words, that's a very unreasonable mean growth rate.
https://en.wikipedia.org/wiki/S%26P_500_Index#Annual_returns Am I missing something here?
Here’s what you’re missing. Imagine you retired in 2007.
If SS was invested in private stocks you’re likely destitute and possibly dead, because your home, 401ks and social security are all underwater.
Social security has less volatility and has an associated cost for that.
Re: Will America's debt doom us?
#157Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
Banish "fair share" from your vocabulary when speaking of taxation. That is a guaranteed way to derail a productive conversation, by shifting it into arguing about what is fair, rather than what would solve the problem.
If we are intent on fairness, the generations that incurred the debts should be the ones forced to pay them off. So for the sake of argument, let's divide the populace by birth year, and institute a tax called the Debt Retirement Tax (DRT).
I took the historic debt from 1791, and divided it into 40 buckets. For each subsequent year, I charged each bucket 2% over inflation, dumped each bucket into the bucket to its left (except the leftmost), and divided the increase in debt, after interest, evenly across all 40 buckets. In years when the debt shrank, the reduction was divided evenly across all buckets with a debt balance.
This was to simulate the relative contributions to paying off and incurring more debt for working persons for each age 25-64, and all people 65 years or older. I presumed that age brackets younger than 24 have too little political power to significantly affect national debt. Scrolling down to 2018, the age 65+ bucket is now responsible for over 59% of the extant debt. Looking at the numbers over the years, and the clusters of zeroes in particular, whenever the debt is reduced, it is always the younger workers paying off the older people's debts. The eldest have never paid off their share of debt. At the 1835 minimum, the algorithm I used puts 100% of the responsibility for that last bit of debt on the age 65+ bucket. But instead of paying it off, they used their political power to charge up more debt, based on the willingness of the younger folks to work harder pay it off.
For the DRT, you could pay an income tax based on how much debt is in your age cohort's bucket, and if your year's bucket gets emptied, then you don't pay DRT the next year unless the debt goes up, and the interest charged on the other buckets doesn't cover your cohort's 1/40th share of it. The DRT can also include an inheritance tax component, so if you die with more debt in your age bucket, the state takes more out of your estate.
What is happening now is like identity theft. Elders are running up credit debt for their own benefit when their grandchildren's names are the ones on the accounts. What could possibly be "fair", when that situation is never addressed?
Re: Will America's debt doom us?
#158Earlier quoted context omitted.
But why would you do that? That forgoes growth and investment now in exchange for .. what exactly?
Future freedom of action. Being in debt can constrain your future options. If nothing else, it can reduce peoples' willingness to lend to you later when you need them to.
People sitting around doing nothing constrains your actions.
In a country which prints dollars, and borrows dollars, future debt cannot constrain action.
The fear here is whether people will stop lending you dollars, but as we can see in the US we are nowhere close to that situation. (Europe/Germany, which is pathologically committed to not having debts has it even worse/better...people are paying them to take their money).
Re: Will America's debt doom us?
#159Earlier quoted context omitted.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
Since most candidates are running on a platform of promising more free things, it doesn't seem likely.
> Since most candidates are running on a platform of promising more free things
Most candidates are running on a platform of directing the taxes citizens pay towards services the citizens want. It's easy, and dishonest, to deride these as "free things" if you don't want them. Even the tax cut tooth fairy is supposed to be deficit neutral due to "dynamic accounting" gimmickry. The difficult lift is to discern what promises are based on flimflam and which are based on honest accounting and reasonable, time-tested assumptions.
Re: Will America's debt doom us?
#160Earlier quoted context omitted.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
There were budget surpluses from 1998 through 2001. One thing you aren't accounting for is tax receipts going up because the economy grows. It's usually the case that spending goes up at the same time, but it doesn't have to go up.
But growing entitlement spending then was not an issue.