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Debt Worldwide Hits Record $86k per Person
- ryanmercer 8y agoUm, am I doing math wrong? 184 trillion divided by 7.7 billion = 23,896
- DeltaCoast 8y agoI think it may be an average amount between those who hold debt rather than everyone in the world.
- reirob 8y agoThis would mean that only 2.14 billion are indebted? At the same time, how does it include public vs. private debt? I think it would be really interesting how the figure of $86,000 per person was calculated.
- jdoliner 8y agoDoes anyone actually still believe that these debts will all someday be repayed? Does anyone even believe that the amount of debt will go down, rather than up, over the course of any length of time? Even a day? I don't, which raises the question: how does a world where debt monotonically increases indefinitely work? Can that happen forever, in which case debt has just become a standin for currency (that allows people to have negative amounts of currency). Or does it eventually go kabloie? Unfortunately I don't have an answer, but I suspect we'll find out within our lifetime.
- api 8y agoNo. Good news is that it's not "real." It's numbers in a database. The stuff, knowledge, and experience that we have is real.
- zxcvvcxz 8y agoWe'll just go to war eventually with someone.
- izzydata 8y agoI'm excited to see how all kinds of things unfold in the next 50 years. Supposedly max human population, running out of oil, icecaps melting, unsustainable amount of food production, dying ecosystems. The economy seems like the least troubling really as it is all superficial anyway.
- rubidium 8y agoThe climate and economy are the only real concerns. Human population, energy, and food production are on a good track getting better.
- malux85 8y agoMe too! I think some things like “unsustainable food production” will probably slowly resolve itself with increases in automation and efficiency, but I do think runaway global warming will need a drastic solution. What other ones do you think will be hardest to solve?
- izzydata 8y agoToo many humans is ethically unsolvable. There is that solution from the book Inferno where they (spoiler alert) release a chemical warhead of somekind that causes the majority of the world to become infertile. But try voluntarily convincing people they aren't allowed to have children. At least it is better than a war that kills off part of the population. We also use other limited resources in unsustainable ways even if it won't deplete in the next 50 years it is obviously inevitable. I hear about usable sand for construction being depleted at a rate faster than it is replenished.
- TACIXAT 8y ago>runaway global warming will need a drastic solution I look forward to our subterranean future. I think the combination of vehicle automation and tunneling technology will allow us to build massive underground systems. If things get too rough on land, we can go below the surface.
- 8y ago
- miketery 8y agoIt doesn't need to be repaid. It creates relationships, in the form of ownership or shared risk. Its why inflation is key and having control over interest rates and quantitate easing is such a powerful tool for managing all this. All this is not to say that it won't blow up in our face (in particular with perverse incentives where we continue to destroy on our environment).
- deleted 8y ago[deleted]
- bb2018 8y agoI think many think articles like this intentionally make the numbers seem as scary as possible. Negative currency (debt) is a good thing for most people. It is what enables people to buy cars and houses or go to college. Of course, many individuals will get in over their head but on the whole it is a positive thing that individuals can take out mortgage and owe more on the house than they put down. The same goes for companies and governments.
- throwaway98434 8y agoExactly. Most people have significantly more than $86k debt in the form of a mortgage. I owe a lot more than $86k on the mortgage for my home. I have more assets than debt and I could pay off my mortgage but it's simply not the best way for me to spend my capital. Additionally, I suspect this article is using a median value for "average income" but a mean value for "average debt." This paints a misleading picture.
- iscrewyou 8y agoSo, speaking in terms of net value, you don’t have debt.
- EpicEng 8y agoThat's obviously not the angle this article takes though. Obviously there is more than enough assets to cover worldwide debt and one only goes into debt to obtain something of value. The context here is debt on paper excluding assets.
- njarboe 8y agoAnd every debt is someone else's asset. I have a retirement plan that owes me money, that has US bonds, that I pay part of the interest on with my taxes. It is when the credits all pile up on the same group and they don't use it wisely, the world can get into a real conundrum that seems to only be solved by violence.
- 8y ago
- james_s_tayler 8y agoAt some point a jubilee will happen.
- ghazak 8y agoInflation (depending on the type and extent) can be a form of slow motion jubilee
- sethrin 8y agoAs I recall, there are few states which have never had an incidence of sovereign default.
- njarboe 8y agoThe USA is sometimes on that list, but confiscation of everyone's gold/(personal credit horde) in the 1930's seems to me to be even a bigger deal than a sovereign debt default.
- aurailious 8y ago> Does anyone actually still believe that these debts will all someday be repayed? I don't understand why you would ask this question. On the individual level its obvious that some debts won't be. It happens all the time for a lot of reasons. So I assume you aren't talking about the individual level. But on the macro level zero debt is a very bad idea and unless civilization collapses there will always be debt. Debt itself is a very good thing. Too much, and too little, of a good thing is bad. So in either case all debts being paid off will almost certainly never happen. > Does anyone even believe that the amount of debt will go down In absolute terms due to inflation it always goes up. > (that allows people to have negative amounts of currency) You say this like its a bad thing. Debt isn't a bad thing. Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future.
- joobus 8y agoThis reads like a person with Stockholm syndrome, captured by the Federal Reserve system. Money/currency does not have to be debt based. For a lot of America's history, it was not debt based.
- isoprophlex 8y agoPeople downvoting this comment: please provide reasons for disagreeing. You are not adding to the discussion by silently downvoting.
- pfranz 8y agoI started a reply, but honestly, I just don't feel like it's worth the energy to follow up with the replies I'd get. Probably because of the tone of the response. I don't see debt as all that much different than insurance. Sure, society can get by without it, and you may never need it, but society in general benefits. If I run a business any large expenses would be amortized over the lifetime of that thing. I could pay for it upfront, but that might never happen and if I could it wouldn't be the best use of my resources. Ideally, I'd "pay rent" in order to borrow money upfront, now that I have that machine it's easier to pay back since that fixed cost will benefit me for the next 20 years. That's the scenario where all debt is never paid back. Financial tools, like anything else can be good or bad depending on the circumstances and motivations at play. Payday loans (generally seen as bad) aren't all that different from micro-loans lauded in third-world countries. Let's say there's an older woman who walks out of town to buy goods and carries them back to town every day to sell (arbitrage). If she gets a small loan to buy more goods up front, invest in a wheelbarrow, or a booth at the market she can do more business and more easily pay off that loan benefiting; her, the person offering the loan, the sellers and the buyers--society in general. If she cannot pay back the loan she can get into a debit spiral. There are situations where that is beneficial to the person giving her the loan at the expense of her and the rest of society.
- dragonwriter 8y ago> Does anyone actually still believe that these debts will all someday be repayed? Approximately no one, in all of history, has ever believed that all debt on the globe would be repaid, so “still” is inappropriate. This is why we have interest, debt jubilees, bankruptcy laws, legal provisions for discharge of certain debt separate from bankruptcy, negotiated debt modifications (and laws which facilitate them), security for debt (and in some cases limitations on collections beyond the security) and numerous other current and historical features of society. > Does anyone even believe that the amount of debt will go down, rather than up, over the course of any length of time? Why should it? The number of people is increasing, as is their average economic output, as is (globally, and in long-term trend) lifespan. So real (much less nominal) aggregate debt can increase over time with no meaningful change to what the average person owes (and is owed) as a proportion of their expected future output.
- user5994461 8y agoOf course. The money supply increases monotonically out of thin air. Think of it. A few centuries ago, there simply wasn't $80000 dollar in the whole world. You'd be quite wealthy for having a single dollar.
- tvural 8y agoIt's worth reading the Ray Dalio debt crisis book to see how this might end - the most likely scenario is the US, Japan, and EU all encountering cash flow problems in the next recession that they resolve by devaluing their currency. In that sense people have less money today than they believe. If all the major currencies and stock markets crash at the same time, there's no safe place for everyone to keep their money.
- CoolGuySteve 8y agoA fixed or limited supply asset will hold its value against fiat currencies devaluing to some extent. Although it's likely that a scarce asset like gold/bitcoin is already artificially inflated by people who currently hold this belief. If those people then liquidate their scarce asset in order to acquire more fiat currency after a devaluation then the market glut will devalue that scarce asset too to some extent.
- nostromo 8y agoAnd, of course, a devaluing would benefit people holding debt.
- z0r 8y agoMoney is abstract labour. Debt is promised future labour. An individual cannot become wealthy in currency that retains meaningful value without others piling up implied debts. If you have saved money but no else has debt you can't compel anyone to work in exchange for your saved money. Debt is inherent to currency.
- XorNot 8y agoThis deserves more upvotes. This is the most succinct, tangible explanation I've come across recently.
- prostoalex 8y ago> how does a world where debt monotonically increases indefinitely work? The interest rate (and hence service payments) on such debt tends to rise. The lenders just price the possibility of distant default and demand fatter checks upfront. > Or does it eventually go kabloie? I am not sure all scenarios are as drastic as you describe. A bunch of countries have a privilege to issue debt in the currencies they themselves control and can inflate their way out of it. People who have paid up a portion of their mortgage can get interested in a HELOC, provided that the interest rates are attractive, or even buy a second house / rental property once the credit situation allows them. Their growing debt is not necessarily an indication of a bad balance sheet - they have tons of collateral and just choose to use the debt mechanisms when it makes sense for them.
- njarboe 8y agoFor every debt there is someone holding it as a credit. Unless the lizard men space alien conspiracy is correct and they will come down with their space weapons to enslave us if we don't pay, this is just digits in a computer and can disappear in a wink of and eye (or revolution). As for the currency idea, that is already how dollars are created. A bank loans out money it owes other people and creates new money.
- jameslk 8y agoI asked a similar question on the Economics Stack Exchange. You may find this helpful: https://economics.stackexchange.com/questions/10007/will-major-economies-be-able-to-repay-their-debt https://economics.stackexchange.com/questions/10007/will-maj...
- jf- 8y agoI’m not an expert, but to hazard a guess, the debt allows financial institutions to extract money directly from government tax take. If I were them, I certainly wouldn’t want that debt to ever be paid off, and indeed to get higher, so that I could keep collecting rent from everyone else in society.
- perfunctory 8y ago> how does a world where debt monotonically increases indefinitely work? Assets also increase monotonically. One cannot talk about debt without talking about assets. You should look at the whole balance sheet. > debt has just become a standin for currency debt IS money. If all the debt in the world is repaid there will be no money.
- posix_me_less 8y agoYou would still have to pay taxes. Presumably, in money.
- lhh 8y agoWhat matters more than nominal amount of debt is the debt-to-income ratio. If people have income (or liquid assets) to cover their debt payments, things are fine. It's generally when that ratio gets large that problems arise. Also, debt is money. When you give me something of value, and I say I will pay you later for it, we have created money. A big part of the problem in down cycles is that lending drastically decreases, and there is therefore less money (broadly defined) in the system.
- joe_the_user 8y agoDoes anyone actually still believe that these debts will all someday be repayed? This kind of rhetoric involves essentially a misunderstanding of our present capitalist system. Individual, organizations and government in the course of their existence, need to sometimes get access to more resources than they currently have. Borrowing for capital expenditures is the means to do this - issuing bonds, taking out mortgages and etc is the basic way this happens. This applies to houses, to bridges and to many other things. Since new, large expenditures happen even as other others are paid-off, of course all the debt is never paid. There's no reason for all the debt to be repaid, paying it all would be counter-productive. We could talk about the particular ways that debt and expenditures are done in this society (and boy there's a lot to talk about there). One big, problematic is imposing more debt on the personal level when it belongs on the state level (see student loans, "health care savings accounts" and other problems). But to begin the conversation, one has to understand how the broad economy works at all, how it's not equivalent personal values of honesty and thrift, etc.
- jklein11 8y ago>>Does anyone actually still believe that these debts will all someday be repayed? I believe that all debts will be repaid. They will either be repaid by the borrow or by the lender, when the borrow can't pay and the lender has to bail them out.
- chewz 8y agoThat's quite rare for debt to be repaid or defaulted upon. Most of the debt is usually just rolled over. Think credit cards, treasury bills, commercial bonds etc.
- jklein11 8y agoDo you have any sources to back that up? I find it hard to believe that credit cards aren't either paid back or ultimately end in bankruptcy. It grows at ~20% per year!
- malmsteen 8y agoIt just means "you need to work" to many people.at the end of the day ? At least thats how I see debt...
- pjdemers 8y agoDebt can increase forever. What can't increase forever is the percentage of income going to interest on debt. So long as income increases at least as fast the interest, increasing debt is sustainable.
- Spooky23 8y agoCurrency is at some level always debt by its nature.
- wufufufu 8y agoI'm ignorant on this, but to me there are two kinds of debt. 1) Personal debt, like I took out a car loan and I can get the car repossessed or the loan sold to debt collectors. 2) Debt that exists just to create more money i.e. the IMF or Fed Reserve decide to have an expansionary monetary policy and they lend from... what exactly? The purpose is to just control inflation. I'm guessing this is the second kind of debt, but the title makes it sound like the first.
- bb2018 8y agoI agree that the article conflates a lot of issues and I can't find a clear explanation on how government debt is calculated. Most of the global debt in the world is from governments and in this case it isnt the worst thing as is usually a relationship where a government owes its own people money but the people owe the government money every year in taxes too.
- guelo 8y ago> Most of the global debt in the world is from governments I don't know about globally but in the US private debt is much bigger that government debt including local, state and federal.
- licnep 8y agoThe total government debt = total private sector savings, to the last cent. That is an accounting truth, for every debtor there is a creditor, and the creditor of the public sector as a whole is the private sector. In reality, when you look at how government debt is actually computed, you will find that government debt is the sum of all the coins and banknotes in circulation, all bank deposits at the central bank, and all treasuries. Basically it's the sum of all the savings denominated in that government's currency. It is purely an accounting illusion, governments could also create money out of nowhere without accounting for it as "debt", but that is the accounting standard we are currently using, mostly an heritage from the gold standard times. I'm not sure what the article accounted for exactly, but if they just did a sum of government debt divided by human population, what the article really means is that there are in circulation about 86k dollars for every human, so the average human has a monetary wealth of 86k (with the median being of course much much lower). We should cheer on that number increasing ,the only bad case is if inflation is higher, so that means in real terms we are on average getting poorer even if we have more dollars per capita.
- intralizee 8y agoSimilar to how the US bailed out the banks. How about the citizens are bailed out. It would boost the economy. Restore faith in the system!
- AnimalMuppet 8y agoThat might be nice, but... how, exactly? By writing off the debts? That's not so nice for those who are owed. A bunch of those are pension funds, for example. If peoples' pensions get wiped out by by all debts being forgiven, they won't be so happy. By the government giving money to people? But where does the government get the money? By taking on debt? Then the government's even more deeply in debt, which means that we the people still are in debt, too. Or does the government just create more money? This might be the least-bad way of doing it, but it would still be hugely inflationary.
- intralizee 8y agoI guess creating more money as you wrote. I believe the government has boosted the economy by giving money to workers to fix things that are not necessarily at the end of life. So to boost the economy by adding more money into the system. I believe it would be a similar strategy.
- randyrand 8y agoAnd what are assets per person?
- pjmorris 8y ago$86,000 per person.
- pjmorris 8y agoFor the downvoters: if it's a different number, where did the rest of the money go?
- umeshunni 8y agoAsset values are not static. e.g if you borrowed $100K for to buy your $110K house 10 years ago, you may have $86K remaining on your mortgage today and your house might have appreciated to $134K.
- pjmorris 8y agoBut the 134K is only a validated if someone buys the house with 134K cash and/or credit. And that 134K is typically measured in terms of comps - nearby houses of similar size and similar condition... that were purchased with cash or credit. Currency is a ledger... one man's debt is another man's credit.
- deleted 8y ago[deleted]
- ctdonath 8y agoThere's a reason ancient Judaism included a "Year of Jubilee", where all debts were forgiven every 50 years.
- digianarchist 8y agoWhen is the next one?
- dv_dt 8y agoWell the last one was post-2008, and if you didn't get your share, then perhaps you weren't one of corporate entities helped out by a Quantitative Easing program.
- dragonwriter 8y agoDebt jubilees have been replaced with other institutions, most notably, in the modern world, bankruptcy (which is need-based rather than regularly scheduled.)
- lotsofpulp 8y agoIf all debt was forgiven every 50 years, why would any lender lend money with a term going past the year before the jubilee?
- maxxxxx 8y agoThey wouldn't and maybe it's a bad idea to enter debt that last more than 50 years. It pretty much means to borrow money that the next generation has to pay off.
- lotsofpulp 8y agoI understood the original comment to mean everyone’s debt is zeroed at 50 year intervals, e.g. 1900, 1950, 2000, etc. regardless of when it started. What you are suggesting is all debt is zeroed out 50 years after it’s issued? Then why would any borrower pay off any principle at all? This whole jubilee thing makes no sense, may be a little bit if the jubilee happens unexpectedly so that people can’t just plan around it. But that kind of sort of happens after a war.
- sdinsn 8y agoIt's kind of silly to spread corporate and government debt across all people. Also, the article makes no mention of what assets are valued at.
- rcMgD2BwE72F 8y ago>It's kind of silly to spread corporate and government debt across all people. Why? The most indebted (how may have billions the bank) still need to have others work for them in order to repay their debt. Billionaires earned billions because "people" work for them (or buy from them, in the end that's the same thing).
- Eridrus 8y agoThere's a real difference between taking out a loan to buy consumables/non-revenue generating depreciating assets and corporate debt that is taken out on the expectation that there will be a higher return on them. In a sense rising corporate debt is a vote of confidence in the growth of the economy as lenders are expecting to be paid back with interest. Government debt is somewhere in between IMO, since it has stimulative effects and the government captures some of that through taxes.
- sdinsn 8y agoBecause debt is counted multiple times. If Company A loans a dollar to Company B, which loans it to Person C, that's $2 of debt but only $1.
- dragonwriter 8y ago> It's kind of silly to spread corporate and government debt across all people. Well, no more than it is to spread the corporate and have government claims on debt across all people as assets. Oh, wait, no one does that.
- me_love_animes 8y agodebt is the ultimate recurring revenue model
- graeme 8y agoDoesn't debt have to sum to zero globally? A debt held by one person is an equal asset owed another. Or perhaps this is a measure of the number of debts outstanding, divided per person, but not accounting for assets.
- akerro 8y agoInterests.
- perfunctory 8y agoBingo. It's meaningless to talk about debt without mentioning assets.
- Spooky23 8y agoNot necessarily in all conversations. The quality of the collateral asset is subject to lots of things. If you look at what happened during the Great Depression, assets were effectively worthless — demand vaporized and seemingly safe loans secured by valuable factories became junk.
- jklein11 8y agoI believe the statistic referenced in this headline is roughly total sum of debt in the world (184 trillion) / earth population (7.6 billion) is the total number of debt per person. I think what you are driving at is exactly why this article is misleading. edit: I don't think debt is exactly zero sum. When a loan is made, the person who took the load has a debt of the present value of future loan payments(ie with interest accrued and adjusted for inflation). The lender has an asset that is the present value of the loan payments times the probability the loan will be payed off. I might be missing something here though.
- ericd 8y agoRight, if you have US government bonds (or a bond fund) in your 401k, that's included in the total. Your savings is also loaned out to others, and counts toward this number.
- rusanu 8y agoIn unrelated news: average mortgage worldwide close to $86k per Person. How much of the Worldwide debt is secured by collateral?
- beatgammit 8y agoIf you count national debt, you get ~$60k/person from that, so the average mortgage would be closer to $20k/person.
- ChuckMcM 8y agoSigh, Bloomberg how far you have fallen. In the article this is the IMF talking, so we're talking about sovereign debt not commercial debt like credit cards or mortgages or car loans. Sovereign debt is nominally repaid through the execution of the economy. A country borrows by selling debt securities, with fixed maturity dates and then redeems those securities once they mature. Consider this really simple example in the US; The treasury department sells a note that has a face value of $10,000 and a maturity date 10 years from now, to Alice for $8,188. If you figure out what interest rate you would need to have $8,188 equal $10,000 in 10 years (monthly compounding) you would find that the "equivalent" interest rate or yield to be 2%. So they have "borrowed" $8,188 dollars from Alice, who, 10 years from now, will turn in her note and they will give her $10,000. They might end up selling two notes to Bob and Charlie just before Alice shows up at the window in order to have cash to give Alice but in either event the note that Alice bought gets "redeemed" (or retired) and it is off the books, it has been "repaid." Over the course of the year revenues come in, and sometimes there is already enough cash in the drawer to pay off Alice without selling any more notes, in which case the total amount of notes out there goes down. The amount of revenue is proportional to the economic output or GDP of the country because, well everything gets taxed a bit. This is easiest to understand when looking at income taxes since the more income (the more people working the more people have incomes or more income) the more taxes you get. So more economic activity results in more revenue for the state, which means selling fewer notes. If spending levels are kept constant, and the economy grows, then you reach a point where you don't need any note sales to pay your bills. So the IMF is responding to the news that the US deficit (which is that the US sold more notes than they had expected revenue) for the month of November was a record[1] to $205B. What does it mean to you and me? Well it probably means a some point someone in Washington DC will have to raise taxes if they want to keep the debt ceiling down. [1] (warning autoplay video) http://fortune.com/2018/12/13/us-budget-deficit-record-november/ http://fortune.com/2018/12/13/us-budget-deficit-record-novem...
- nameisu 8y agobut half the world will never earn 86k in their whole life
- shoo 8y agoTo anyone wondering what debt "means", or if some debts will ever be repaid, or wondering about "jubilees" where debts are forgiven, I recommend David Graeber's book "Debt: The First 5000 Years". I am not sure if some of the ideas about debt that Graeber argues are correct, but he does discuss a lot of interesting examples of debt from societies throughout history. https://www.mhpbooks.com/books/debt/ https://www.mhpbooks.com/books/debt/ https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
- nonbel 8y ago>"To anyone wondering what debt "means", or if some debts will ever be repaid, or wondering about "jubilees" where debts are forgiven" Can you just give the answers to these questions?
- dpiers 8y agoTo be fair, he directed people to a >500 page book on the subject as a good introduction to some of these ideas. Do you expect him to effectively summarize a massive text in a single HN comment?
- toasterlovin 8y agoIs three sentences asking too much?
- anoncoward111 8y agoI feel this way every time someone recommends a study or a book to me. If you can't summarize it for a 5 year old, then you are either lazy or don't understand it yourself. For example, instead of telling me to read a 500 page book, you can say "the Big Bang is this really crazy but suprisingly plausible theory that our universe just suddenly exploded from nothing into this really hot and dense and chaotic realm, and now everything is expanding and cooling down and getting farther apart but also clumping together because of gravity. Check it out!" Becuase at least then you can say "oh wow, why is it clumping together? how do we know gravity is a thing?"
- verelo 8y agoGiven i personally have 1.5 million, that feels nice and low.
- jasongill 8y agoweird flex, but ok
- yesforwhat 8y agojust a normal flex, really
- verelo 8y agoFlex? Just openly sharing debt info that is relevant to the article, meanwhile we have a whole bunch of people previously applauded for openly sharing their salaries, and I’m the one flexing? Thanks for your contribution...it’s not a flex, it’s just a fact.
- qwerty456127 8y agoWhat if we just delete all the debt and start from zero? Won't the zero (everything people have built and developed to the date) be better than if the debtors had never taken the credits? I would like a theoretical answer ignoring the ethical part and the fact creditors will become less willing to lend money again if this happens.
- deleted 8y ago[deleted]
- wskinner 8y agoAnd what about the creditors? And what about the future people who want to borrow to finance something, but are unable to because everyone is afraid to lend money?
- andy_ppp 8y agoWhat if some humans are greedy to the point of everyone suffering huge social issues, what if creditors get their money while the poor starve? Won’t somebody think of the bankers in all this!
- iambvk 8y agoWhy-Not depends on which side you fall into. There are two sides: People with Debt and People collecting Payments. People-Paying would love to start from zero. People-Collecting would not want that. If you think about it as two groups (theoretically): one group receives monthly, recurring payments from the other group. In practice, individuals move from one group to another group and back, etc. based on life circumstances. But here is a catch: Due to a bug or design, if an individual (or few individuals or families) could always stay in the receiving-group, he can live for free till end of time (or system halts/collapses.) What will blow your mind is, are there such individuals or families in the system by design?
- vinyasmusic 8y agoDidn't know we owed money to World Bank of Earth 29.
- me551ah 8y agoWhen I read the title my first reaction was 'Who tf does the world owe money to, the martians?'. Though reading the article and comments did make it a lot clearer to me.
- ScrimptonDeluxe 8y agobut I thought capitalism was the most efficient economic system :(((
- intrasight 8y agoDebt doesn't concern me. As another poster said "The total government debt = total private sector savings, to the last cent. That is an accounting truth". What does concern me is obligations - specifically underfunded public pension obligations. There is no accounting balance here - a day of reckoning will surely come. "Mitchell and Friedberg warned that the pension hole will swallow public- and private-sector employees alike, because all income earners will pay for it. Mitchell ran a simple calculation to illustrate her point: If the shortfall were $5 trillion, divide that amount by the 158 million workers in the American labor force for an obligation of about $32,000 per worker." http://knowledge.wharton.upenn.edu/article/the-time-bomb-inside-public-pension-plans/ http://knowledge.wharton.upenn.edu/article/the-time-bomb-ins...
- afterburner 8y ago> public pension obligations. There is no accounting balance here - a day of reckoning will surely come. These scare stories are solved by a modest rise in taxes. The obligations are summed over many decades and projected into the future.
- assblaster 8y agoModest rise in taxes... Across the board to person in the United States? To only the 50% of people who are taxpayers? To only the top 10% who pay 70% of the taxes already? Tax those who do not generate income traditionally but rather earn based on investments? Seizure of personal assets? Depending on how you go about this, you could create economic stagnation because of burdensome pension programs. Alternatively, you could cut benefits, or privatize the investments rather than simple redistribution from one payroll tax payer to one pensioner. I'm in favor of privatization combined with benefit reduction and increased minimum retirement age. The combination of these three could easily solve any pension shortfall and generate long term wealth for every American.
- deleted 8y ago[deleted]
- singularity2001 8y agoIsn't worldwide accumulative debt 0.0 by definition?
- zygotic12 8y agoIssac Newton changed the world for the better by creating fractional reserve banking. But it's like an elastic band as we noticed in 2008. To get any perspective on this a breakdown by age groups would be more revealing. My goggle fu failing me.
- sytelus 8y agoIf everyone is borrowing then who owing? The trick is to borrow against the future generations. Assume that it was legally allowed to borrow $1000 against the income that would be generated by your kids 10 years later. You can use this to accumulate infinite amount of debt by extending to grad-kids and so on. This is more or less what is happening. Government made promises to pay pensions/medical benefits to large quantity of people but doesn't have that kind of money from tax income. So they borrow from the future generation by printing more money promising to pay itself back. The net result is inflation like phenomenon which rises cost of services but not the income for the new folks who enter the job market. So this debt indicates amount of hardship future generations will encounter, at least at the start of their careers.