3 ms·

"Arguably they're the root of most of our debt issues." Are they? Growing debt is necessary for a growing economy in a debt based society (AKA capitalism). It

by jk2323 9y ago

"Arguably they're the root of most of our debt issues." Are they? Growing debt is necessary for a growing economy in a debt based society (AKA capitalism). It was the housing debt bubble that kept the economy going (by increasing debt), it was not the housing bubble causing the problems. "The question is: when do we reach the point that oil supply is growing too slowly to produce the level of economic growth needed to keep our current debt system from crashing?" http://www.resilience.org/stories/2014-02-12/limits-to-growth-at-our-doorstep-but-not-recognized/ http://www.resilience.org/stories/2014-02-12/limits-to-growt...

lmm 9y ago
> Growing debt is necessary for a growing economy in a debt based society (AKA capitalism). You can also increase the velocity of money; the economy is the product of the supply and the velocity. > It was the housing debt bubble that kept the economy going (by increasing debt), it was not the housing bubble causing the problems. A bubble is a problem almost by definition.
- jk2323 9y ago
  "A bubble is a problem almost by definition." Define a "bubble". Capitalism, a debt based driven industrialized society (high capital requirements and pre financing for the production of goods) is a running bubble. You always have to create a bigger one. And that "most money was printed the last 10 years" is just a consequence of this.
  - lmm 9y ago
    > Define a "bubble". When overvaluation falls into a self-reinforcing spiral. Of course overvaluation is only obvious in retrospect. But our industrialised society has delivered a lot of very real quality-of-life improvements, so I think the value is real.
wu-ikkyu 9y ago
By definition, a society based on debt has a negative net worth on the books. The only people who can logically value the perpetually indebted existence of billions of people and the massive leverage that comes with that as a net gain are the central banks to which the debt and interest is owed.
- jk2323 9y ago
  "By definition, a society based on debt has a negative net worth on the books." No. One man's assets are another man's liabilities. And debt creation is always based on a better tomorrow. Why most big companies (there may be very few exceptions) have a shitload of debt? Even Oil giants have a tremendous amount of debt. Debt is always paid back with more debt (in hope of a better tomorrow). This systems works extremely well as long as tomorrow IS better than today. It will collapse, it must collapse when the growth stops. In this regard, Ludwig von Mises was actually wrong since he always describes perfectly a middle ages based trading and marked based society but not capitalism (so after 1750). He also dreamed of "treasure boxes" that entrepreneurs must have in their cellars to do investments. There are no treasure boxes and it is the pressure from debt that give us this tremendous dynamic. Let him speak for himself: http://www.azquotes.com/picture-quotes/quote-credit-expansion-can-bring-about-a-temporary-boom-but-such-a-fictitious-prosperity-must-ludwig-von-mises-120-36-52.jpg http://www.azquotes.com/picture-quotes/quote-credit-expansio... He is right with that. But what he does not say is that ALL booms bring a credit expansion. This is the very inherent thing of a boom. Small joke on the side: "Net worth": http://christianfinanceblog.com/wp-content/uploads/2009/03/networthcomic.jpg http://christianfinanceblog.com/wp-content/uploads/2009/03/n...
  - wu-ikkyu 9y ago
    >One man's assets are another man's liabilities. Exactly. National debt is a liability for the nation. It's an asset for the central bank which created it. Ipso facto the central bank owns the nation.

by jk2323 9y ago

lmm 9y ago

> Growing debt is necessary for a growing economy in a debt based society (AKA capitalism). You can also increase the velocity of money; the economy is the product of the supply and the velocity. > It was the housing debt bubble that kept the economy going (by increasing debt), it was not the housing bubble causing the problems. A bubble is a problem almost by definition.

jk2323 9y ago
"A bubble is a problem almost by definition." Define a "bubble". Capitalism, a debt based driven industrialized society (high capital requirements and pre financing for the production of goods) is a running bubble. You always have to create a bigger one. And that "most money was printed the last 10 years" is just a consequence of this.
- lmm 9y ago
  > Define a "bubble". When overvaluation falls into a self-reinforcing spiral. Of course overvaluation is only obvious in retrospect. But our industrialised society has delivered a lot of very real quality-of-life improvements, so I think the value is real.

wu-ikkyu 9y ago

By definition, a society based on debt has a negative net worth on the books. The only people who can logically value the perpetually indebted existence of billions of people and the massive leverage that comes with that as a net gain are the central banks to which the debt and interest is owed.

jk2323 9y ago
"By definition, a society based on debt has a negative net worth on the books." No. One man's assets are another man's liabilities. And debt creation is always based on a better tomorrow. Why most big companies (there may be very few exceptions) have a shitload of debt? Even Oil giants have a tremendous amount of debt. Debt is always paid back with more debt (in hope of a better tomorrow). This systems works extremely well as long as tomorrow IS better than today. It will collapse, it must collapse when the growth stops. In this regard, Ludwig von Mises was actually wrong since he always describes perfectly a middle ages based trading and marked based society but not capitalism (so after 1750). He also dreamed of "treasure boxes" that entrepreneurs must have in their cellars to do investments. There are no treasure boxes and it is the pressure from debt that give us this tremendous dynamic. Let him speak for himself: http://www.azquotes.com/picture-quotes/quote-credit-expansion-can-bring-about-a-temporary-boom-but-such-a-fictitious-prosperity-must-ludwig-von-mises-120-36-52.jpg http://www.azquotes.com/picture-quotes/quote-credit-expansio... He is right with that. But what he does not say is that ALL booms bring a credit expansion. This is the very inherent thing of a boom. Small joke on the side: "Net worth": http://christianfinanceblog.com/wp-content/uploads/2009/03/networthcomic.jpg http://christianfinanceblog.com/wp-content/uploads/2009/03/n...
- wu-ikkyu 9y ago
  >One man's assets are another man's liabilities. Exactly. National debt is a liability for the nation. It's an asset for the central bank which created it. Ipso facto the central bank owns the nation.