5 ms·

Well, you aren't alone: most professional economists ignore banking and debt entirely. To paraphrase Paul Krugman: "It's just money we owe ourselves." Histori

Well, you aren't alone: most professional economists ignore banking and debt entirely. To paraphrase Paul Krugman: "It's just money we owe ourselves." Historically, however, debt has been social nitroglycerine, which is why Christianity outlawed usury and Judaism had a 50-year debt jubilee built into it. We will relearn this lesson eventually, but in the meantime our bandaged finger goes wabbling back to the fire.

analog31 8y ago
I suspect that personal debt and national debt are of different species. There's also an old saying: "If you owe the bank a dollar, you're a debtor. If you owe the bank a million dollars, you're a partner." For an economic prediction to be meaningful, it needs an approximate date attached to it.
hshehehjdjdjd 8y ago
I’m not sure the idiosyncratic tenets of Christianity or Judaism can serve as the foundation of sound economic (or other) policy. I need something more compelling than “a myth invented more than two thousand years ago says it’s a bad idea” to make me believe that there is something wrong with T-bills. For that matter, this seems like not such a great argument, because substantially all other countries also have their own analogue of treasury bonds, and few of them have inequality as bad as we do in the US.
- quantumofmalice 8y ago
  If you'd like a more technical explanation why the older systems were right, you can read Steve Keen's work. On the other hand, if you enjoy the surprise of financial crises every decade and major currency crises every five decades, you can continue listening to modern economists.
  - leetcrew 8y ago
    forgive me if my ignorance is showing, but it doesn't entirely seem useful to talk about particular systems being "right" or "wrong". to me it just looks like a fairly typical risk-reward tradeoff. if you want wealth to grow fast, you need to accept high variance in the market. if you want low variance, you need to resign yourself to a low rate of return. one of the main ways that we enter into this tradeoff is through leverage.
gaius 8y ago
It's just money we owe ourselves Not quite true: it’s the money we owe our future selves. So you can arrive in the future and find that the pension that should have been waiting for you there was borrowed by past-people and they never paid it back. And you can’t go back in time to demand it back.
- ItsMe000001 8y ago
  We don't have a time machine. Everything consumed today is produced today (disregarding short term storing in warehouses, that only goes so far). I don't buy the argument "but... future generations!" Future generations have to deal with whatever their situation is at their future time. They don't have to send anything back through time to us. If they are so impressed by abstract numbers in computers that their economy crashes and they become unable to feed themselves something else is wrong - it's not the fault of those abstract numbers, and I would think they are either pretty stupid (unlikely, unless heavy metal poisoning becomes a global phenomenon and global IQ relative to today goes the path shown in "Idiocracy"), or their system of a society is extremely dysfunctional. Money is an idea, nothing more. It is incredibly flexible, humans can do with it whatever they want, whenever they want. Did you notice, looking at history, that whenever there was a crisis humans discovered that "money" is not an obstacle? For example, financing wars (WWII especially), or the recent crisis.
  - paulryanrogers 8y ago
    Resources processed into consumables (soon to be waste) and waste byproducts will have a meaningful impact on future people. And with fewer easily processable resources available they'll be less equipped to clean up our messes. Economics and money are tools that could help mitigate the consumption-at-all-costs problems we have today.
    - ItsMe000001 8y ago
      > with fewer easily processable resources available I don't think that that is true. For one, the meaning of "easily" shifts all the time, second, I don't see the problem when people actually have something worthwhile to do with their lives. I am very concerned about what we do to the environment (as someone who had chronic heavy metal poisoning treated by chelators in a university clinic when I hear about mercury in sea fish it actually has a deep personal meaning), but that is a different issue than resource extraction (which of course may make the environmental situation even worse). On the other hand, I see researching and developing capabilities to understand and manipulate the environment on a large scale much much better as a very worthwhile economic endeavor. For example, this also gives us a starting point for future projects in space, including "terraforming". It's obviously something we could have lots of fun developing - instead of selling insurance, "financial tools" (on top of financial tools), and other BS "products". People working in that sector, which could very well be(come) a major part of humanity, would not have the problem of finding their job meaningless, as so many do today. That the control system we use to steer humanity is incapable of steering us into such an obviously useful and worthwhile direction, but instead steers us towards environmental destruction, creating meaningless jobs, gets people to cheat one another like there's no tomorrow and being honest actually takes a real effort tells me our control system is really bad and out of control. Th eproblem is that the control system (e.g. "finance") has become the final target, instead of being seen as a tool. Instead of optimizing the tool for society we try to optimize society for the tool ("everybody has to be in the stock market - for retirement!" -- Wallstreet approves).

analog31 8y ago

I suspect that personal debt and national debt are of different species. There's also an old saying: "If you owe the bank a dollar, you're a debtor. If you owe the bank a million dollars, you're a partner." For an economic prediction to be meaningful, it needs an approximate date attached to it.

hshehehjdjdjd 8y ago

I’m not sure the idiosyncratic tenets of Christianity or Judaism can serve as the foundation of sound economic (or other) policy. I need something more compelling than “a myth invented more than two thousand years ago says it’s a bad idea” to make me believe that there is something wrong with T-bills. For that matter, this seems like not such a great argument, because substantially all other countries also have their own analogue of treasury bonds, and few of them have inequality as bad as we do in the US.

quantumofmalice 8y ago
If you'd like a more technical explanation why the older systems were right, you can read Steve Keen's work. On the other hand, if you enjoy the surprise of financial crises every decade and major currency crises every five decades, you can continue listening to modern economists.
- leetcrew 8y ago
  forgive me if my ignorance is showing, but it doesn't entirely seem useful to talk about particular systems being "right" or "wrong". to me it just looks like a fairly typical risk-reward tradeoff. if you want wealth to grow fast, you need to accept high variance in the market. if you want low variance, you need to resign yourself to a low rate of return. one of the main ways that we enter into this tradeoff is through leverage.

gaius 8y ago

It's just money we owe ourselves Not quite true: it’s the money we owe our future selves. So you can arrive in the future and find that the pension that should have been waiting for you there was borrowed by past-people and they never paid it back. And you can’t go back in time to demand it back.

ItsMe000001 8y ago
We don't have a time machine. Everything consumed today is produced today (disregarding short term storing in warehouses, that only goes so far). I don't buy the argument "but... future generations!" Future generations have to deal with whatever their situation is at their future time. They don't have to send anything back through time to us. If they are so impressed by abstract numbers in computers that their economy crashes and they become unable to feed themselves something else is wrong - it's not the fault of those abstract numbers, and I would think they are either pretty stupid (unlikely, unless heavy metal poisoning becomes a global phenomenon and global IQ relative to today goes the path shown in "Idiocracy"), or their system of a society is extremely dysfunctional. Money is an idea, nothing more. It is incredibly flexible, humans can do with it whatever they want, whenever they want. Did you notice, looking at history, that whenever there was a crisis humans discovered that "money" is not an obstacle? For example, financing wars (WWII especially), or the recent crisis.
- paulryanrogers 8y ago
  Resources processed into consumables (soon to be waste) and waste byproducts will have a meaningful impact on future people. And with fewer easily processable resources available they'll be less equipped to clean up our messes. Economics and money are tools that could help mitigate the consumption-at-all-costs problems we have today.
  - ItsMe000001 8y ago
    > with fewer easily processable resources available I don't think that that is true. For one, the meaning of "easily" shifts all the time, second, I don't see the problem when people actually have something worthwhile to do with their lives. I am very concerned about what we do to the environment (as someone who had chronic heavy metal poisoning treated by chelators in a university clinic when I hear about mercury in sea fish it actually has a deep personal meaning), but that is a different issue than resource extraction (which of course may make the environmental situation even worse). On the other hand, I see researching and developing capabilities to understand and manipulate the environment on a large scale much much better as a very worthwhile economic endeavor. For example, this also gives us a starting point for future projects in space, including "terraforming". It's obviously something we could have lots of fun developing - instead of selling insurance, "financial tools" (on top of financial tools), and other BS "products". People working in that sector, which could very well be(come) a major part of humanity, would not have the problem of finding their job meaningless, as so many do today. That the control system we use to steer humanity is incapable of steering us into such an obviously useful and worthwhile direction, but instead steers us towards environmental destruction, creating meaningless jobs, gets people to cheat one another like there's no tomorrow and being honest actually takes a real effort tells me our control system is really bad and out of control. Th eproblem is that the control system (e.g. "finance") has become the final target, instead of being seen as a tool. Instead of optimizing the tool for society we try to optimize society for the tool ("everybody has to be in the stock market - for retirement!" -- Wallstreet approves).