55% of the US National Debt Is the Result of Repaying Debt with More Debt • Hacker News Board

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#91

Post by justsomedude43 » Tue, Jul 24, 2018, 1:48 PM UTC

nybble41 wrote: post #86

justsomedude43 wrote: post #37

If you lend money to yourself, why not just write the debt off?

Because we're not actually borrowing from ourselves, we're borrowing from future generations. That said, there is no plan (or will) to ever pay back the debt, so the difference is academic. The politicians will just keep borrowing (i.e. spending; it makes zero difference whether the funds come from loans or inflating the currency supply) until there is no capital left to consume.

How can there be no capital left to consume if the borrowed money has no support to back it up? You're saying we're borrowing from future generations which is like saying we're borrowing money from air. If we're borrowing money from non-existent source then there is an endless supply of the money, isn't there?

And if there's no plan to pay it off, then why not just write it off? It makes no difference, the whole effect is psychological.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#92

Post by nybble41 » Tue, Jul 24, 2018, 3:19 PM UTC

justsomedude43 wrote: post #91

nybble41 wrote: post #86

Earlier quoted context omitted.

Because we're not actually borrowing from ourselves, we're borrowing from future generations. That said, there is no plan (or will) to ever pay back the debt, so the difference is academic. The politicians will just keep borrowing (i.e. spending; it makes zero difference whether the funds come from loans or inflating the currency supply) until there is no capital left to consume.

How can there be no capital left to consume if the borrowed money has no support to back it up? You're saying we're borrowing from future generations which is like saying we're borrowing money from air. If we're borrowing money from non-existent source then there is an endless supply of the money, isn't there? And if there's no plan to pay it off, then why not just write it off? It makes no difference, the whole effe…

Money per se is irrelevant; it's what you can buy with it that counts. Normally, to get money you have to produce something; when you spend that money you're claiming your share of what has been produced. If you buy on credit (with intent to repay) then you're committing your own future production capacity towards paying off the loan, with interest. If we want to hand our descendents a world at least as good as the one we received from our ancestors then we need to produce at least as much as we consume—more, actually, since some of that production will need to be dedicated toward the preservation and maintenance of capital (production capacity). If we borrow without any intention of ever paying down that debt, or (equivalently) introduce new money out of thin air in order to fund consumption, then the equation is unbalanced; there is no production to offset that consumption. That implies a reduction in capital investment (again: production capacity), which means goods will be harder to produce and thus more scarce in the future, which means a poorer quality of life for future generations.

> And if there's no plan to pay it off, then why not just write it off? It makes no difference, the whole effect is psychological.

On that point I agree with you. However, I am arguing that we should plan to pay it off, and thus do our part to maintain and improve this world before handing it off to our children.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#93

Post by mindslight » Thu, Jul 26, 2018, 10:15 PM UTC

damptowel wrote: post #82

mindslight wrote: post #58

Earlier quoted context omitted.

> 1. All money is debt insofar as it only represent goods as services yet to be rendered, an I Owe You as it were You're drawing a false equivalence. A dollar (or a gold bar) does not represent a specific amount of goods or services that any specific counterparty is bound to deliver. So in general no, money is not inherently debt. > 4. If you believe the good times are going to keep rolling, and any bad times will, o…

> You're drawing a false equivalence. A dollar (or a gold bar) does not represent a specific amount of goods or services that any specific counterparty is bound to deliver. So in general no, money is not inherently debt. This is confused. A dollar is a debt/credit dual created by central bank and private finance operations. A dollar is a unit of monetary accounting, a physical dollar is a token representation of a de…

Yes, a dollar does represent a coupled obligation of someone out there to collect it (or another dollar) in order to satisfy their debt. I do agree that a dollar is therefore debt-based money.

What I was refuting was OP calling all currency in general "debt" based on it having little "intrinsic use", and therefore only useful for what it can be traded for.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#94

Post by arcbyte » Mon, Jul 30, 2018, 2:38 PM UTC

UncleMeat wrote: post #65

arcbyte wrote: post #60

There's a lot of talk about how the Federal Gov't isn't like a household or business. It is different, but not to extent that people who preach that like to pretend. That aside, I wonder what opportunities and paradigm shifts we are missing out on by being ok with all this debt, good or not. The American gov't is so far in the hole that it doesn't have ANY wealth! What if we built up a Sovereign Wealth Fund such that…

Funding the government on interest is going to require more than 100T in capital.

US GDP is 18T, which means we only need 5 years worth of GDP.

If we saved/invested a surplus each year equal to the amount we reduced the public debt under Clinton in the year 2000 - $230 billion and assumed the 4% annualized returns - the same rate you're requiring for your 100T figure - for 75 years, we'd have 100T.