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> An interesting mental experiment is to think in what would happen if all the governments pay all the 'debt' and stop spending. I suppose they would have to e

by qb45 9y ago

> An interesting mental experiment is to think in what would happen if all the governments pay all the 'debt' and stop spending. I suppose they would have to explicitly collect taxes to cover their current spending, not make bets on the future of economy. Isn't it how our civilization worked for a long time? > Our challenge is not whether we can “afford” to make the payments we have promised to seniors, veterans, the disabled, government contractors, healthcare providers, bondholders, etc. (today, tomorrow and into the indefinite future) but whether we will be a productive enough nation to allow the government to make good on those promises without causing an inflation problem. I don't really see the difference. If we are productive, the government can compel citizens one way or another to deliver on those promises. If we aren't, it can't and it needs to reduce them - either explicitly or implicitly by devaluing the money they are denominated in or any other creative way it could come up with. So sure, whether the government can afford future spending is the same thing as whether the economy will be big enough to tax it with fulfilling these promises. I think. OK, so somehow I got back to making bets on future economy. But this time it appears to be a bet made to justify future spending, not current spending, so unavoidable.

RobertoG 9y ago
"I suppose they would have to explicitly collect taxes to cover their current spending, not make bets on the future of economy. Isn't it how our civilization worked for a long time?" So, If the government have pay all its debt and it's not spending anymore, where the money that is collecting as taxes come from? " don't really see the difference. If we are productive, we can compel citizens one way or another to deliver on those promises. If we aren't, we can't and we have to reduce them - either explicitly or implicitly by devaluing the money they are denominated in." The difference is what we should be doing now. Should we be reducing the deficit because we will "run out" or money? or should we try to increase the future productivity creating infrastructure and knowledge? What of the two options will make it possible to pay in the future? "OK, so somehow I got back to making bets on future economy. But this time it appears to be a bet made to justify future spending, not current spending, so unavoidable." I'm talking about investing in the sense of creating real assets. A bet and an investment are not the same thing, even if it is true that many 'investors' nowadays think that it is. You added content to your post after I answered you, by the way. It's better if you answer in another post.
Someone 9y ago
Part of "current spending" _is_ making bets on the future state of the economy. Governments build roads, dig ports, build new neighborhoods, etc. in anticipation of economic and/or population growth. When a company lends money to do such that, it is called leverage, and considered a good thing because it allows them to make higher yields on their capital. Shouldn't governments be judged the same if they borrow money to speed up such developments?

by qb45 9y ago

RobertoG 9y ago

"I suppose they would have to explicitly collect taxes to cover their current spending, not make bets on the future of economy. Isn't it how our civilization worked for a long time?" So, If the government have pay all its debt and it's not spending anymore, where the money that is collecting as taxes come from? " don't really see the difference. If we are productive, we can compel citizens one way or another to deliver on those promises. If we aren't, we can't and we have to reduce them - either explicitly or implicitly by devaluing the money they are denominated in." The difference is what we should be doing now. Should we be reducing the deficit because we will "run out" or money? or should we try to increase the future productivity creating infrastructure and knowledge? What of the two options will make it possible to pay in the future? "OK, so somehow I got back to making bets on future economy. But this time it appears to be a bet made to justify future spending, not current spending, so unavoidable." I'm talking about investing in the sense of creating real assets. A bet and an investment are not the same thing, even if it is true that many 'investors' nowadays think that it is. You added content to your post after I answered you, by the way. It's better if you answer in another post.

Someone 9y ago

Part of "current spending" _is_ making bets on the future state of the economy. Governments build roads, dig ports, build new neighborhoods, etc. in anticipation of economic and/or population growth. When a company lends money to do such that, it is called leverage, and considered a good thing because it allows them to make higher yields on their capital. Shouldn't governments be judged the same if they borrow money to speed up such developments?