4 ms·

"Now, there's nothing wrong with that — in fact, it's a good idea in general" When you are spending more money than the money coming into the system, which hap

"Now, there's nothing wrong with that — in fact, it's a good idea in general" When you are spending more money than the money coming into the system, which happens with almost all socialist systems (because commerce is severely restricted), it collapses.

jsprogrammer 11y ago
Is there an economy in existence that doesn't run a deficit? I don't think it is possible under current monetary regimes.
- api 11y ago
  Only petro-states and places with little economy to speak of as far as I know. Net debt equals net savings, so the vast majority of developed economies run deficits because somebody has to soak up the surplus they create. But Venezuela was a petro state. See my other post for the real reason for their collapse.
- psuter 11y ago
  If you believe this list [1], South Korea, Germany, Switzerland, among others (I've informally excluded tiny and oil-rich ones). [1] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2222rank.html https://www.cia.gov/library/publications/the-world-factbook/...
  - jsprogrammer 11y ago
    Heh, downmods for a question. Classic HN. Anyway, I checked out the first country (South Korea) in your source. 2014-12-31 estimate of outstanding debt is $424.5 Billion with a credit stock of ~$2.4 trillion. If you want to only analyze receipts over a short period of time, then I'd guess you can find a positive period for most countries.
tomp 11y ago
> When you are spending more money than the money coming into the system, which happens with almost all socialist systems You mean, like the USA?
- bgilroy26 11y ago
  Every company that starts on credit is spending more money than the money coming into the system. It is rational in a stable society to borrow against future earnings in order to invest in the ventures that will generate those earnings. The United States can spend according to their projections for the value of US Treasury Bills. US Treasury Bills, in turn, are an investment in the future US economy as a whole. The connection between them is fuzzy and distant but at least in theory the government is run on tax-receipts even though T-Bills are doing so well they are self-sustaining. Venezuela was borrowing against their own future and their economy was tied up in energy. They are in a different situation.
  - tomp 11y ago
    > US Treasury Bills, in turn, are an investment in the future US economy as a whole If only the debt/GDB ratio wasn't growing over the years...
SilasX 11y ago
Should probably include the context of the quote, which I think already says that: >>The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend. I think even the article doesn't go far enough though: it's not just about whether you "have enough money", but whether you can reliably expect to keep getting that money, and you won't see increases in your spending obligations. On that note: There's a dangerously common mentality out there that doesn't understand the concept of "good times don't last forever": Your country has a lot of oil money coming in? Save some for when it isn't. Revenues are high because of a tech boom? Set it aside for later. Your pension fund investments returned 30% this year? No, don't pay out 23% to the managers "since they hit their 7% target"; that 30% has to cancel out down years. And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied.
- bobby_9x 11y ago
  "And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied." Too true. I've talked to many successful small business owners that managed to make it through multiple recessions. This is usually the key to surviving.
giardini 11y ago
Really? "Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from "Why the Founding Fathers Loved the National Debt" http://www.bloombergview.com/articles/2013-01-25/why-the-founding-fathers-loved-the-national-debt http://www.bloombergview.com/articles/2013-01-25/why-the-fou... How many times has the US collapsed?
giardini 11y ago
What about non-socialist systems? "Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from "Why the Founding Fathers Loved the National Debt" http://www.bloombergview.com/articles/2013-01-25/why-the-founding-fathers-loved-the-national-debt http://www.bloombergview.com/articles/2013-01-25/why-the-fou...
- protomyth 11y ago
  Alexander Hamilton's goal was to assume the debt from the independent states to bring power to the federal government. He wasn't a lover of debt. He was a lover of federal power. As a side note, how this figured into the creation of Washington DC is pretty interesting.

jsprogrammer 11y ago

Is there an economy in existence that doesn't run a deficit? I don't think it is possible under current monetary regimes.

api 11y ago
Only petro-states and places with little economy to speak of as far as I know. Net debt equals net savings, so the vast majority of developed economies run deficits because somebody has to soak up the surplus they create. But Venezuela was a petro state. See my other post for the real reason for their collapse.
psuter 11y ago
If you believe this list [1], South Korea, Germany, Switzerland, among others (I've informally excluded tiny and oil-rich ones). [1] https://www.cia.gov/library/publications/the-world-factbook/rankorder/2222rank.html https://www.cia.gov/library/publications/the-world-factbook/...
- jsprogrammer 11y ago
  Heh, downmods for a question. Classic HN. Anyway, I checked out the first country (South Korea) in your source. 2014-12-31 estimate of outstanding debt is $424.5 Billion with a credit stock of ~$2.4 trillion. If you want to only analyze receipts over a short period of time, then I'd guess you can find a positive period for most countries.

tomp 11y ago

> When you are spending more money than the money coming into the system, which happens with almost all socialist systems You mean, like the USA?

bgilroy26 11y ago
Every company that starts on credit is spending more money than the money coming into the system. It is rational in a stable society to borrow against future earnings in order to invest in the ventures that will generate those earnings. The United States can spend according to their projections for the value of US Treasury Bills. US Treasury Bills, in turn, are an investment in the future US economy as a whole. The connection between them is fuzzy and distant but at least in theory the government is run on tax-receipts even though T-Bills are doing so well they are self-sustaining. Venezuela was borrowing against their own future and their economy was tied up in energy. They are in a different situation.
- tomp 11y ago
  > US Treasury Bills, in turn, are an investment in the future US economy as a whole If only the debt/GDB ratio wasn't growing over the years...

SilasX 11y ago

Should probably include the context of the quote, which I think already says that: >>The first step was when Hugo Chávez's socialist government started spending more money on the poor, with everything from two-cent gasoline to free housing. Now, there's nothing wrong with that — in fact, it's a good idea in general — but only as long as you actually, well, have the money to spend. I think even the article doesn't go far enough though: it's not just about whether you "have enough money", but whether you can reliably expect to keep getting that money, and you won't see increases in your spending obligations. On that note: There's a dangerously common mentality out there that doesn't understand the concept of "good times don't last forever": Your country has a lot of oil money coming in? Save some for when it isn't. Revenues are high because of a tech boom? Set it aside for later. Your pension fund investments returned 30% this year? No, don't pay out 23% to the managers "since they hit their 7% target"; that 30% has to cancel out down years. And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied.

bobby_9x 11y ago
"And in personal lives: Your current job seems like an absurdly good deal? Save and cross-train for when it becomes obsolete or oversupplied." Too true. I've talked to many successful small business owners that managed to make it through multiple recessions. This is usually the key to surviving.

giardini 11y ago

Really? "Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from "Why the Founding Fathers Loved the National Debt" http://www.bloombergview.com/articles/2013-01-25/why-the-founding-fathers-loved-the-national-debt http://www.bloombergview.com/articles/2013-01-25/why-the-fou... How many times has the US collapsed?

giardini 11y ago

What about non-socialist systems? "Alexander Hamilton believed that a domestic debt, supported by federal taxes collected from all the states, would unify the country", a quote from "Why the Founding Fathers Loved the National Debt" http://www.bloombergview.com/articles/2013-01-25/why-the-founding-fathers-loved-the-national-debt http://www.bloombergview.com/articles/2013-01-25/why-the-fou...

protomyth 11y ago
Alexander Hamilton's goal was to assume the debt from the independent states to bring power to the federal government. He wasn't a lover of debt. He was a lover of federal power. As a side note, how this figured into the creation of Washington DC is pretty interesting.