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At a world level that's not what debt really is and that's not how debt is created. Debt isn't created by production/consumption. Debt is created by central ban

At a world level that's not what debt really is and that's not how debt is created. Debt isn't created by production/consumption. Debt is created by central banks + treasuries in today's world. In the past, people worked and created value and that produced money. Today, "the system" creates money ( or debt ) first and then society is expected to work to "pay it back". It truly is a form of quiet slavery, not based on race, but based on wealth and privilege. You can say that debt is a liability for one party and an asset for the counterparty. But debt or bonds are also control. One party has control over the other. And more importantly, the more debt there is, the more power the people who control debt and who control interest rates have on governments, nations and the world. If you look at debt through a narrow window, then it's just a simple ledger entry. If you realize what debt is and see it in relation with power and influence, things aren't so simple.

dnautics 8y ago
> It truly is a form of quiet slavery, not based on race, but based on wealth and privilege. That sovereign debt has this property is truly underappreciated in our society and I think one of the great tragedies of the 20th century. We see ostensibly liberal economists calling for increased sovereign spending and sovereign debt without understanding that the debt treadmill enslaves the poorest the in the heaviest shackles. Generally the mathematical resolution for sovereign debt is inflation and the blind retort that I hear all the time is that the poor are in debt and inflation helps those in debt which I don't know where it comes from but is woefully ignorant of the thue state of things (the poor are usually not in debt having less access to finance and when they do they are in short term high interest debt - and many financial instruments, that the wealthy use to increase their wealth like options and leveraged trading, require availability of lending to exist).
- panarky 8y ago
  > the [sovereign] debt treadmill enslaves the poorest the in the heaviest shackles I hear this frequently stated as fact but I've seen no evidence for it, and it doesn't make intuitive sense to me. Sovereign debt is serviced either through taxation or through inflation. It's the rich who pay a majority of the taxes, and rich creditors also suffer the most from inflation. So how, exactly, are the poor on the hook for national debt?
  - dnautics 8y ago
    > rich creditors also suffer the most from inflation. > Most of the rich are net debtors. 1) Have you ever traded options? You are borrowing. Have you ever taken out an inverse ETF? You are borrowing. Have you ever traded Forex? You are borrowing. Have you never participated directly or indirectly in those instruments? You are not rich. 2) Just do the math. If you're poor, and spending 90% of your day to day on inflation sensitive expenses, and there is x% inflation (let's plug in x=10, because it's easy, but it applies at all percentages, an exercise to the reader) then your margin of living will be impacted by 90%. Note if you were spending 95% of your day to day on inflation sensitive expenses, you would be underwater after 10% inflation. By contrast, if you were spending 20% of your day to day on inflation sensitive expenses, your margin of survival would only decrease by ~3%. The typical retort that I am going to anticipate is that wages keep track with inflation. They don't and, that's by design. I will quote the great liberal economist here: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Just to be clear that we understand the policy here in blunt terms: The point of inflation is to cheat the working classes out of their income so that the ruling class can lay claim to high employment metrics.
- wutbrodo 8y ago
  > We see ostensibly liberal economists calling for increased sovereign spending and sovereign debt without understanding that the debt treadmill enslaves the poorest the in the heaviest shackles. Your analysis is missing a pretty critical half: Those in support of leaning more on borrow-and-spend are generally advocating for the increased spending skewed towards the poor and for the taxes that pay for debt service/paydown skewed towards the rich. I don't see how this vision, fully-realized, would "enslave the poorest in the heaviest shackles".
  - dnautics 8y ago
    The effects of a debt treadmill are compounding, and good intentions do not good policy make. Typically people think, "the poor have little political power because they're poor". Maybe we should turn that on its head: "The poor are poor because they have little political power" I live in the bay area. Even here, companies jockey for federal funding like NIH grants and SBIRs. There's a lot of money in those. I promise you very few if anyone in deep poverty in the city of san francisco (tenderloin, parts of soma) are being awarded these grants. In Europe, where there are social democracies, I promise you an upper middle-class person connected to the technocrats in Brussels is going to be a greater beneficiary of largesse than a muslim from a banlieue in Paris.
    - wutbrodo 8y ago
      Right, I suppose I'm speaking purely abstractly, where a sufficiently-well-implemented system has redistributional benefits exceed the losses to waste, misallocation, or corruption. I'm not as convinced as you likely are that such a system is theoretically unlikely, but I don't disagree too much with your characterization in reality, at least currently.

dnautics 8y ago

> It truly is a form of quiet slavery, not based on race, but based on wealth and privilege. That sovereign debt has this property is truly underappreciated in our society and I think one of the great tragedies of the 20th century. We see ostensibly liberal economists calling for increased sovereign spending and sovereign debt without understanding that the debt treadmill enslaves the poorest the in the heaviest shackles. Generally the mathematical resolution for sovereign debt is inflation and the blind retort that I hear all the time is that the poor are in debt and inflation helps those in debt which I don't know where it comes from but is woefully ignorant of the thue state of things (the poor are usually not in debt having less access to finance and when they do they are in short term high interest debt - and many financial instruments, that the wealthy use to increase their wealth like options and leveraged trading, require availability of lending to exist).

panarky 8y ago
> the [sovereign] debt treadmill enslaves the poorest the in the heaviest shackles I hear this frequently stated as fact but I've seen no evidence for it, and it doesn't make intuitive sense to me. Sovereign debt is serviced either through taxation or through inflation. It's the rich who pay a majority of the taxes, and rich creditors also suffer the most from inflation. So how, exactly, are the poor on the hook for national debt?
- dnautics 8y ago
  > rich creditors also suffer the most from inflation. > Most of the rich are net debtors. 1) Have you ever traded options? You are borrowing. Have you ever taken out an inverse ETF? You are borrowing. Have you ever traded Forex? You are borrowing. Have you never participated directly or indirectly in those instruments? You are not rich. 2) Just do the math. If you're poor, and spending 90% of your day to day on inflation sensitive expenses, and there is x% inflation (let's plug in x=10, because it's easy, but it applies at all percentages, an exercise to the reader) then your margin of living will be impacted by 90%. Note if you were spending 95% of your day to day on inflation sensitive expenses, you would be underwater after 10% inflation. By contrast, if you were spending 20% of your day to day on inflation sensitive expenses, your margin of survival would only decrease by ~3%. The typical retort that I am going to anticipate is that wages keep track with inflation. They don't and, that's by design. I will quote the great liberal economist here: https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-inflation/ https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi... > Yet when you have very low inflation, getting relative wages right would require that a significant number of workers take wage cuts. So having a somewhat higher inflation rate would lead to lower unemployment, not just temporarily, but on a sustained basis. Just to be clear that we understand the policy here in blunt terms: The point of inflation is to cheat the working classes out of their income so that the ruling class can lay claim to high employment metrics.
wutbrodo 8y ago
> We see ostensibly liberal economists calling for increased sovereign spending and sovereign debt without understanding that the debt treadmill enslaves the poorest the in the heaviest shackles. Your analysis is missing a pretty critical half: Those in support of leaning more on borrow-and-spend are generally advocating for the increased spending skewed towards the poor and for the taxes that pay for debt service/paydown skewed towards the rich. I don't see how this vision, fully-realized, would "enslave the poorest in the heaviest shackles".
- dnautics 8y ago
  The effects of a debt treadmill are compounding, and good intentions do not good policy make. Typically people think, "the poor have little political power because they're poor". Maybe we should turn that on its head: "The poor are poor because they have little political power" I live in the bay area. Even here, companies jockey for federal funding like NIH grants and SBIRs. There's a lot of money in those. I promise you very few if anyone in deep poverty in the city of san francisco (tenderloin, parts of soma) are being awarded these grants. In Europe, where there are social democracies, I promise you an upper middle-class person connected to the technocrats in Brussels is going to be a greater beneficiary of largesse than a muslim from a banlieue in Paris.
  - wutbrodo 8y ago
    Right, I suppose I'm speaking purely abstractly, where a sufficiently-well-implemented system has redistributional benefits exceed the losses to waste, misallocation, or corruption. I'm not as convinced as you likely are that such a system is theoretically unlikely, but I don't disagree too much with your characterization in reality, at least currently.