6 ms·

If you drink too much at night, you'll get a hangover in the morning. The same is true of spending and debt.

by hvs 11y ago

wdmeldon 11y ago
Well that doesn't bode well. I've personally never learned anything from a hangover.
- collyw 11y ago
  Nothing about your tollerance to alcohol?
a3voices 11y ago
That's true if the capital is misallocated. Spending and debt can greatly increase a country's well-being if used effectively.
- AnimalMuppet 11y ago
  If. There's three kinds of debt. One is corporate. A company took on debt to buy some equipment. That can be mis-investment, but it's usually pretty good. Second, there's personal debt. That counts both mortgages (usually worthwhile, unless you buy more house than you need) and stuff like credit card debt, where you're still paying for Christmas five years later. So, some is worthwhile, some not so much. Third, there's government debt. This can be used effectively to create infrastructure. The problem is, though, that it's allocated not by a careful cost/benefit analysis. Instead, it's allocated by politicians. This kind of debt therefore has the highest propensity to be sheer waste.
  - a3voices 11y ago
    Well, there's some situations where it is so obvious to use debt that you don't need a cost/benefit analysis. For example, let's say you discover a large deposit of gold on land you own. You could use debt to buy the mining equipment to mine the gold. Another example is if terrorists demolished all the bridges between Manhattan and Brooklyn. The government doesn't need a cost/benefit analysis to decide to use debt to rebuild some bridges.
    - JumpCrisscross 11y ago
      > Well, there's some situations where it is so obvious to use debt that you don't need a cost/benefit analysis. For example, let's say you discover a large deposit of gold on land you own. You could use debt to buy the mining equipment to mine the gold. Many leveraged miners are going bankrupt for having not done cost/benefit analysis on something so obvious...
Retra 11y ago
I really do not see the value in pretending a problem with this degree of complexity can be adequately reduced to such a simple statement.
Domenic_S 11y ago
Drinking too much is borrowing tomorrow's happiness Debt is borrowing tomorrow's prosperity
- happyscrappy 11y ago
  I like this, is it your quote?
  - Domenic_S 11y ago
    The alcohol one has been around the interwebs. I added the debt part.
- pvaldes 11y ago
  Not if you can fix your debt to the back to the first guy that you find in the street. They drinked to much at night, why are we having a hangover in the morning?.
pdkl95 11y ago
That's usually true for personal debut. For governments, it's a dangerous misconception. The only problem with personal debt is when it becomes systemic. The fallacy of composition is that what's good for individual is not necessarily good if we all do it at the same time. Normally lowing your price to be more competitive is a useful strategy, but not when it becomes a race to 0. We saw this in the great depression with farmers publicly throwing out their product. As for governments, the austerity meme is class politics in disguise, and tends to lead to nasty social blowback. Governments can change monetary policy and other law, giving them a lot more options.
- marcosdumay 11y ago
  You know, government debit can grow until it's not sustainable anymore. And seems to be doing exactly that world around for the last couple of decades. I know this disagree with mainstream economics, and almost all niche economics theories. But it's happening again and again, so fuck the theories.
  - deleted 11y ago
    [deleted]
    - parasubvert 11y ago
      "Keynesian economics is fundamentally broken" How so, other than you don't like it? The data over the past 9 years seems to have confirmed a Keynesian analysis of the global economy. "but it allows the governments to spend as much as they want" No, that's not how it works. Keynes' theory is about how a general glut can happen, due to the role of money and bonds as a second and third variable in markets (vs the usual supply and demand curve). There are various techniques to get out of it, the only time government should spend money is when we've basically dropped interest rates to 0% - free money! - and companies still aren't spending it. "Furthermore, it devalues the money in our wallet everyday we don't spend" You mean by inflation? The inflation that doesn't currently exist? http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.usinflationcalculator.com/inflation/current-infla... Deflation on the other hand, has always been scary, for hundreds of years.

If you drink too much at night, you'll get a hangover in the morning. The same is true of spending and debt.

by hvs 11y ago

If you drink too much at night, you'll get a hangover in the morning. The same is true of spending and debt.

wdmeldon 11y ago

Well that doesn't bode well. I've personally never learned anything from a hangover.

collyw 11y ago
Nothing about your tollerance to alcohol?

a3voices 11y ago

That's true if the capital is misallocated. Spending and debt can greatly increase a country's well-being if used effectively.

AnimalMuppet 11y ago
If. There's three kinds of debt. One is corporate. A company took on debt to buy some equipment. That can be mis-investment, but it's usually pretty good. Second, there's personal debt. That counts both mortgages (usually worthwhile, unless you buy more house than you need) and stuff like credit card debt, where you're still paying for Christmas five years later. So, some is worthwhile, some not so much. Third, there's government debt. This can be used effectively to create infrastructure. The problem is, though, that it's allocated not by a careful cost/benefit analysis. Instead, it's allocated by politicians. This kind of debt therefore has the highest propensity to be sheer waste.
- a3voices 11y ago
  Well, there's some situations where it is so obvious to use debt that you don't need a cost/benefit analysis. For example, let's say you discover a large deposit of gold on land you own. You could use debt to buy the mining equipment to mine the gold. Another example is if terrorists demolished all the bridges between Manhattan and Brooklyn. The government doesn't need a cost/benefit analysis to decide to use debt to rebuild some bridges.
  - JumpCrisscross 11y ago
    > Well, there's some situations where it is so obvious to use debt that you don't need a cost/benefit analysis. For example, let's say you discover a large deposit of gold on land you own. You could use debt to buy the mining equipment to mine the gold. Many leveraged miners are going bankrupt for having not done cost/benefit analysis on something so obvious...

Retra 11y ago

I really do not see the value in pretending a problem with this degree of complexity can be adequately reduced to such a simple statement.

Domenic_S 11y ago

Drinking too much is borrowing tomorrow's happiness Debt is borrowing tomorrow's prosperity

happyscrappy 11y ago
I like this, is it your quote?
- Domenic_S 11y ago
  The alcohol one has been around the interwebs. I added the debt part.
pvaldes 11y ago
Not if you can fix your debt to the back to the first guy that you find in the street. They drinked to much at night, why are we having a hangover in the morning?.

pdkl95 11y ago

That's usually true for personal debut. For governments, it's a dangerous misconception. The only problem with personal debt is when it becomes systemic. The fallacy of composition is that what's good for individual is not necessarily good if we all do it at the same time. Normally lowing your price to be more competitive is a useful strategy, but not when it becomes a race to 0. We saw this in the great depression with farmers publicly throwing out their product. As for governments, the austerity meme is class politics in disguise, and tends to lead to nasty social blowback. Governments can change monetary policy and other law, giving them a lot more options.

marcosdumay 11y ago
You know, government debit can grow until it's not sustainable anymore. And seems to be doing exactly that world around for the last couple of decades. I know this disagree with mainstream economics, and almost all niche economics theories. But it's happening again and again, so fuck the theories.
- deleted 11y ago
  [deleted]
  - parasubvert 11y ago
    "Keynesian economics is fundamentally broken" How so, other than you don't like it? The data over the past 9 years seems to have confirmed a Keynesian analysis of the global economy. "but it allows the governments to spend as much as they want" No, that's not how it works. Keynes' theory is about how a general glut can happen, due to the role of money and bonds as a second and third variable in markets (vs the usual supply and demand curve). There are various techniques to get out of it, the only time government should spend money is when we've basically dropped interest rates to 0% - free money! - and companies still aren't spending it. "Furthermore, it devalues the money in our wallet everyday we don't spend" You mean by inflation? The inflation that doesn't currently exist? http://www.usinflationcalculator.com/inflation/current-inflation-rates/ http://www.usinflationcalculator.com/inflation/current-infla... Deflation on the other hand, has always been scary, for hundreds of years.