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A fascinating digression. I conceptualize borrowing oppositely. When you borrow, you borrow from someone else's past/present labor and obligate your future lab

A fascinating digression. I conceptualize borrowing oppositely. When you borrow, you borrow from someone else's past/present labor and obligate your future labor. (Where 'you' can be an individual, organization, or society.) In my view, borrowing is always from the past. You cannot borrow that which has not yet been created.

sgc 9y ago
Actually most of the money that is borrowed (approx 90% AFAIK) is invented and injected into the economy. You borrow against the future because this new creation of currency must later be paid by labor or investments.
- tedsanders 9y ago
  In my conceptualization, money is not the thing that is borrowed. Money is just the measuring stick. What's actually borrowed is the stuff bought with the money. And that stuff is made in the past or present, not the future. For example, imagine I take a loan to buy a house. The people who built the house invested their labor with the expectation of future payment. Or if they spent their wages, then the firm that fronted their wages invested labor into building the firm with the expectation of future payment. Generally, if one borrows, someone else must loan. This means that if you are consuming before producing, then at some point in the economic chain, there is someone who has produced but not yet consumed. It is in this sense that I conceptualize borrowing as coming from the past. This notion is reflected in the GDP equation of a closed economy: GDP = C + I. Any consumption over production must be balanced by investment, which is itself past production. Of course, if we are to conceptualize literally, then borrowers do not borrow from either the future or the past. They borrow from banks.
  - sgc 9y ago
    The entire economy is a system designed to encourage human activity, and is not based in truth of value. That builder borrowed the funds to build. It actually is turtles all the way down to the Central Bank, which dictates that money exists. Controlling assets is not the same thing as consuming, and money is designed to designate control rather than consumption. I can borrow money to buy stocks, which are nothing more than a promise of a corporate future. etc. People and entities do not have control because they have produced, but because they have controlled, or are part of the system that magnifies control to create more of it (through the banking system). We elect to accept this system of the government determining who can control assets based on a vision of human society, or simply because we cannot object in a meaningful way. We borrow almost exclusively from money created by the government. In the end we borrow from nobody, but borrow by means of a de facto authority. The mutual agreement of human wills is more powerful than any sort of temporal precedence. In that sense we borrow from neither the past nor the future. Of course you are correct that a large portion of borrowed funds are used to control tings that have already been produced. But the money is created at the same instant the loan is made. And it must be repaid by future labor or returns. Since it is not necessary for the money to be used to purchase something that already exists (and another large portion of borrowed funds are used for futures of myriad kinds), but it is always true that future results must be used for repayment, I think it is more accurate to say we borrow from the future.
garmaine 9y ago
Sadly that’s not how money actually works at the macro level. The fed magics the money into existence in return for a promise for the treasury to repay with taxpayer money 10 tears down the line.

sgc 9y ago

Actually most of the money that is borrowed (approx 90% AFAIK) is invented and injected into the economy. You borrow against the future because this new creation of currency must later be paid by labor or investments.

tedsanders 9y ago
In my conceptualization, money is not the thing that is borrowed. Money is just the measuring stick. What's actually borrowed is the stuff bought with the money. And that stuff is made in the past or present, not the future. For example, imagine I take a loan to buy a house. The people who built the house invested their labor with the expectation of future payment. Or if they spent their wages, then the firm that fronted their wages invested labor into building the firm with the expectation of future payment. Generally, if one borrows, someone else must loan. This means that if you are consuming before producing, then at some point in the economic chain, there is someone who has produced but not yet consumed. It is in this sense that I conceptualize borrowing as coming from the past. This notion is reflected in the GDP equation of a closed economy: GDP = C + I. Any consumption over production must be balanced by investment, which is itself past production. Of course, if we are to conceptualize literally, then borrowers do not borrow from either the future or the past. They borrow from banks.
- sgc 9y ago
  The entire economy is a system designed to encourage human activity, and is not based in truth of value. That builder borrowed the funds to build. It actually is turtles all the way down to the Central Bank, which dictates that money exists. Controlling assets is not the same thing as consuming, and money is designed to designate control rather than consumption. I can borrow money to buy stocks, which are nothing more than a promise of a corporate future. etc. People and entities do not have control because they have produced, but because they have controlled, or are part of the system that magnifies control to create more of it (through the banking system). We elect to accept this system of the government determining who can control assets based on a vision of human society, or simply because we cannot object in a meaningful way. We borrow almost exclusively from money created by the government. In the end we borrow from nobody, but borrow by means of a de facto authority. The mutual agreement of human wills is more powerful than any sort of temporal precedence. In that sense we borrow from neither the past nor the future. Of course you are correct that a large portion of borrowed funds are used to control tings that have already been produced. But the money is created at the same instant the loan is made. And it must be repaid by future labor or returns. Since it is not necessary for the money to be used to purchase something that already exists (and another large portion of borrowed funds are used for futures of myriad kinds), but it is always true that future results must be used for repayment, I think it is more accurate to say we borrow from the future.

garmaine 9y ago

Sadly that’s not how money actually works at the macro level. The fed magics the money into existence in return for a promise for the treasury to repay with taxpayer money 10 tears down the line.