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Edited by Mrph1 on Nov 30th 2023 at 11:03:59 AM
(Blank stare) What?
Oh. I didn't realize....
edited 6th Dec '12 2:42:36 PM by TheStarshipMaxima
It was an honorAs long as you're making lots of money fast, you can have as much debt as you want, because your lenders are certain you'll be able to pay it off. In fact, they'd prefer to have you in debt, because they'll make more money in the long run from your interest payments. And if you export to foreign countries that own your debt, you want to stay in debt, because they'll keep spending the money from your interest payments on products you're trying to sell to them.
I have no economic background whatsoever and I can figure that much out.
Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.So from what I read: government bonds are basically like lending money to business, except you let the government borrow money instead. And you expect the money back eventually while you collect interest from it. (Actually, bonds sound a lot similar to stocks, but apparently they are different types of securities. I don't really see a tangible difference, though.)
I guess the question is when a lender needs the money too, and asks the money back and the debtor doesn't comply, what happens? A person would declare bankruptcy or something, but what happens if the government refuses and just delays the payment? I wonder how many lenders think that way.
If the government just makes more money and gives that, then the bonds would be eliminated from the equation and we're back to spending/taxing duality with a greater money supply. Then we're back to square one with trying to balance the current budget.
@TSM: Yes I do.
Seriously, the important part of my post was the first nine words. People are afraid we're no longer making lots of money fast. Our problem is revenue and getting the customer base spending again, not cutting and making sure the wealthiest can sit on larger and larger piles of money. Paying off our debts just means that lenders have more money to sit on and not spend (aside from investment in derivatives gambling, which is paying people to be the last one sitting on large piles of money when the game is over).
The people to whom we owe money are not your parents or your neighbours, who need that money back to make it through the winter. They are in charge of the largest concentration of wealth in human history.
Share it so that people can get into this conversation, 'cause we're not the only ones who think like this.@ Maxima: this will be confusing as shit, so bear with me.
1: as has been previously noted, we print our currency. The US dollar is effectively backed by the faith of people in the US Government to pay its debt. Therefore as long as people believe our money is good, it is good.
2: Most of our "debt" exists in a form you would know better as the Treasury Bond. When the US government wants to take out a "loan" their credit line exists in the form of bonds that say "pay us this much now, and we will pay you back later for it plus interest"
3: Miost of said bonds are in the hands of US Citizens, so effectively, we're loaning ourselves money.
4: The actual goal of spending on the debt in the long term has less to do with total repayment, and more with the currency inflating over time as the economy expands. Inflation, despite republican cries of terror, is not always a bad thing. In general, for the average consumer (or the government debt) Inflation is a good thing (the caveat being /massive/ inflation is bad, yes. But a controlled, steady amount is not), because as the average worth of a single dollar falls (due to there being more in existence) the general worth of debts fall. In practice, this means we want debts to not accrue as fast as inflation, because this means any amount of debt we accrue eventually becomes meaninglessly small.
Incidentally. This is why Banks and other businessy types hate inflation with a vengeance and claim it is always always bad. Because it means your /private/ debts to them also mean less, and that their accumulated stockpiles of wealth are shrinking in value.
edited 6th Dec '12 2:55:42 PM by Midgetsnowman
Well the real big problem is when they start demanding back their debt. You have to pay it back. However if you think they can pay it back you're better off having them pay off over as long a period as possible because you will get more in interest that way. So the reason why you would not allow them to do that is because you do not think they can pay back over a long period of time. This is why faith is important here.
What we really need to do is flood money to the poor who will spend it rapidly as they don't have much choice in the matter. They don't really have enough to hoard it. This will make the economy move again instead of hoard. We need to put money where it's active. Not where it sits.
The rich aren't really the ones who create jobs. The poor do. They create the demand. They are the ones who spend. They are the ones that grow small businesses. The rich are where the economy stops. Not where it starts.
edited 6th Dec '12 5:33:26 PM by shimaspawn
Reality is that, which when you stop believing in it, doesn't go away. -Philip K. Dick
yeah. ironically, most of the debt is in the hands of the same people demanding we pay back the debt by cutting the shit out of programs that disproportionately aid the less rich.
You know. The Rich.
(and most of this is basic econ 101 stuff. which I insists should be something all college students need to take ;/ )
speaking of which. Funny story. One time in my econ 101 class, the professor showed us a website that allowed us to make any and all cuts we wanted to the government to see if we could balance the budget. The primarily small town redneck group who were mostly there to get their business degrees (unlike me, who took it for fun) tried to cut only those things republicans claim are killing our budget (In short. we ignored all subsidies and the military and medicare (because half of them were in their 50's, too)anbd took all the money out of the bidget to pay government workers and NPR). We barely made even a minor dent.
edited 6th Dec '12 3:00:38 PM by Midgetsnowman
@Midget: My explanations were better.
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:P
I was mostly trying to make the point that the number one flaw in the whole argument about the deficit is that it supposes all inflation ever is bad. Which is only true if you have a fuckton of money and or a ton of people owe you money.
true. I guess I just had a good teacher in that he made absolutely sure we covered macroeconomics as well. or rather. the business school sector of the college refused to let you take micro until you did macro. Which makes a certain sort of sense in that macro-economics is far more important to be available to general ed students looking for an elective.
edited 6th Dec '12 3:07:02 PM by Midgetsnowman
@Maxima: Shit like this makes me wonder if we shouldn't add in basic economics as a required college course. I we'd solve a lot of problems if more of the voter base was aware of basic facts like this. I know I had economics as a high school class, but I think that was only because I was able to pass by a good chunk of the history classes.
Sigh.
Michigan Republicans are rocketing Michigan into a right to work state.
Its already passed the house and will soon reach senate and the governor will sign it immediately.
Other than the protests, there is little opposition at all.
I hate this state so much.
edited 6th Dec '12 3:07:31 PM by Thorn14
which is kind of silly. Micro barely requires a course if you even remotely understand supply and demand. However, supply curves and demand curves and the basics of how banks can literally create money out of thin air is kind of important.
Look on the bright side. Detroit is already an economic wasteland so it cant possibly destroy the state economically any further than it already has.
edited 6th Dec '12 3:09:12 PM by Midgetsnowman
I know many majors in our university have basic economics requirements, but more micro than macro, since more majors are involved in business than directly in government.
@Kostya: I'm not sure how much a high school economics course can cover. Our schools tend to have half a year of government and half a year of economics. The issue is, how much can you explain in one semester? The macroeconomic concepts require the relationship between government and society so you need some background in that, too.
I thought only the federal government can "make" money, not banks.
edited 6th Dec '12 3:12:30 PM by Trivialis
Do you even need macro to understand why the GOP is wrong? I think every student in school learns a little bit about supply and demand. If you know anything about that then it should be blatantly obvious why protecting the supply while destroying the demand does absolutely nothing.
Most students get that in their current social studies class. I'm sure they can work it out so you learn both at the same time.
edited 6th Dec '12 3:11:31 PM by Kostya
Inflation isn't bad, nor is it good. It's a force.
You take out a mortgage on your house for 200k with no interest (Miraculously), and have to pay it back over some years.
10 years pass, and things cost twice what they did before. But, because the cost of your mortgage has stayed the same, it's effectively half as much that you have to pay back.
On the opposite side, you do the exact same thing... but some miracle happens and we go back to the days where a cup of coffee is a nickle. Congratulations, you're now never going to be able to pay that back within your lifetime unless you win the lottery a few times and are exceedingly lucky.
Deflation is bad for the public, as it makes their debts larger. Inflation is bad for the banks because it makes the public's debts smaller.
And thus, the banks have a vested interest in making inflation seem like the devil, and thus make it seem like the only form which inflation can come in is just as you said, loaves of bread becoming $400 per.
And what was said about China, that they only hold a fraction of our debt, is absolutely true. It's not even close to half, and, while I'm not certain about the number, I'm fairly certain it's less than a quarter.
Very big Daydream Believer. "That's not knowledge, that's a crapshoot!" -Al Murray "Welcome to QI" -Stephen Fry

We are paying back our debts, Maxima. We are paying them back slowly.