3 ms·

I ask again: What happens if the government makes a ton of bad loans that never get paid?

by fowtowmowcow 3y ago

danaris 3y ago
The government would seem to have every recourse to collect.
- willcipriano 3y ago
  In a manner of speaking. Take a look at student loans, how have they been intending to collect on those lately?
  - 0zemp2c 3y ago
    those loans are being repaid with votes Democrats dangled loan forgiveness at the midterms, bought enough votes to blunt a Republican trouncing...never followed through to reward the voters but no worries, the promise can be re-made for the Presidential election all Biden has to do is offer full loan forgiveness and the election is his DeSantis will counter with auto loan forgiveness (just as big of a problem now), and it will be a battle to see who can buy more votes
- fowtowmowcow 3y ago
  Hard to collect money on unemployed and dead.
  - diordiderot 3y ago
    Your thinking is too fine grained. Missing forest through the trees. For a nation state with it's own currency, money is the sum of the production capacity / natural resources of that nation state. You don't need Joe and Sue to pay you back.
    - fowtowmowcow 3y ago
      Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.
      - pessimizer 3y ago
        Joe and Sue also don't pay back their loans to private banks, and those banks get bailed out.
        deleted 3y ago
        [deleted]
        fowtowmowcow 3y ago
        Depends on the size of the bank. Obviously the government prints money when it needs to buy ideally it ain't just freely printing willy nilly every day.
      - diordiderot 3y ago
        The house is still there, it is repriced and sold. The bank cannot lose money because money is a representation of all production and resources in the economy. (Edit: balance sheet is always zero) There is no deflation because you are the bank and you can print money. There isnt inflation because you can tax assets or reduce velocity of money (i.e. inflation) through transaction tax.
        deleted 3y ago
        [deleted]
        fowtowmowcow 3y ago
        [flagged]
        slashdev 3y ago

I ask again: What happens if the government makes a ton of bad loans that never get paid?

danaris 3y ago

The government would seem to have every recourse to collect.

willcipriano 3y ago
In a manner of speaking. Take a look at student loans, how have they been intending to collect on those lately?
- 0zemp2c 3y ago
  those loans are being repaid with votes Democrats dangled loan forgiveness at the midterms, bought enough votes to blunt a Republican trouncing...never followed through to reward the voters but no worries, the promise can be re-made for the Presidential election all Biden has to do is offer full loan forgiveness and the election is his DeSantis will counter with auto loan forgiveness (just as big of a problem now), and it will be a battle to see who can buy more votes
fowtowmowcow 3y ago
Hard to collect money on unemployed and dead.
- diordiderot 3y ago
  Your thinking is too fine grained. Missing forest through the trees. For a nation state with it's own currency, money is the sum of the production capacity / natural resources of that nation state. You don't need Joe and Sue to pay you back.
  - fowtowmowcow 3y ago
    Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.
    - pessimizer 3y ago
      Joe and Sue also don't pay back their loans to private banks, and those banks get bailed out.
      - deleted 3y ago
        [deleted]
      - fowtowmowcow 3y ago
        Depends on the size of the bank. Obviously the government prints money when it needs to buy ideally it ain't just freely printing willy nilly every day.
    - diordiderot 3y ago
      The house is still there, it is repriced and sold. The bank cannot lose money because money is a representation of all production and resources in the economy. (Edit: balance sheet is always zero) There is no deflation because you are the bank and you can print money. There isnt inflation because you can tax assets or reduce velocity of money (i.e. inflation) through transaction tax.
      - deleted 3y ago
        [deleted]
      - fowtowmowcow 3y ago
        [flagged]
      - slashdev 3y ago