4 ms·

Here's the thing... It is very hard to tell now if we've gotten our money's worth for the debt. Many things are much better today than 50 or 100 years ago. L

Here's the thing... It is very hard to tell now if we've gotten our money's worth for the debt. Many things are much better today than 50 or 100 years ago. Longer lifespans, better health care, less pollution.... Was it worth the debt? Hard to say. Also - debt is just one person owing money to another. Yes someone today funded their consumption at someone else's expense. But guess what - someone tomorrow will get the dollar back to consume it. We can argue that as a country we will be paying for the consumption of others in the future, but is that so awful for the world's richest place? (And please note - this rant comes from someone who believes we should live within our means and balance the budget)

seanmcdirmid 9y ago
We can't really "balance" the budget though, as there are just too many savings needs and the USA has become a debtor of last resort (which in turn is why the dollar is so strong and widely used). Money you need tomorrow can't really be saved under a mattress, someone has to "spend" it today, hopefully on something productive that will provide enough value tomorrow to pay it back. Saved money must produce growth, it has to be invested in someway, even if it is just invested in ultra safe but low interest government bonds and treasuries. If everyone lived within their means, but still needed to save money, we'd all be screwed. These are wild imbalances one sees in china, where the lack of a safety net and sky high housing prices means one must save much of their income, dragging down consumption and leading to easy money for SOEs, who then often spend it unproductively.
- pitaj 9y ago
  By balancing the budget we wouldn't be getting rid of debt, we'd be stopping the growth of debt. Ideally, debt should grow at the rate of inflation, but there can be some large spending times and some low spending times. Debt shouldn't be larger than a significant portion of the economy.
  - seanmcdirmid 9y ago
    We already have mechanisms to control debt accumulation: raise interest rates if we want to borrow more and lower interest rates if we want to borrow less. Interest rates have been rock bottom, negative if inflation is considered, and the US government has been practically paid to borrow via Treasuries. > Debt shouldn't be larger than a significant portion of the economy. Are you referring to just public debt? It really depends again on saving needs. It really isn't that simple. Debt in itself isn't bad, default on debt is bad. If you had to choose between debt and a depression, unless you are Hoover, you will choose debt.
- mathattack 9y ago
  You are assuming that savings needs to be govt backed debt. Why not baskets of corp debt or lower risk equities instead?

seanmcdirmid 9y ago

We can't really "balance" the budget though, as there are just too many savings needs and the USA has become a debtor of last resort (which in turn is why the dollar is so strong and widely used). Money you need tomorrow can't really be saved under a mattress, someone has to "spend" it today, hopefully on something productive that will provide enough value tomorrow to pay it back. Saved money must produce growth, it has to be invested in someway, even if it is just invested in ultra safe but low interest government bonds and treasuries. If everyone lived within their means, but still needed to save money, we'd all be screwed. These are wild imbalances one sees in china, where the lack of a safety net and sky high housing prices means one must save much of their income, dragging down consumption and leading to easy money for SOEs, who then often spend it unproductively.

pitaj 9y ago
By balancing the budget we wouldn't be getting rid of debt, we'd be stopping the growth of debt. Ideally, debt should grow at the rate of inflation, but there can be some large spending times and some low spending times. Debt shouldn't be larger than a significant portion of the economy.
- seanmcdirmid 9y ago
  We already have mechanisms to control debt accumulation: raise interest rates if we want to borrow more and lower interest rates if we want to borrow less. Interest rates have been rock bottom, negative if inflation is considered, and the US government has been practically paid to borrow via Treasuries. > Debt shouldn't be larger than a significant portion of the economy. Are you referring to just public debt? It really depends again on saving needs. It really isn't that simple. Debt in itself isn't bad, default on debt is bad. If you had to choose between debt and a depression, unless you are Hoover, you will choose debt.
mathattack 9y ago
You are assuming that savings needs to be govt backed debt. Why not baskets of corp debt or lower risk equities instead?