3 ms·

I don't think it's 'awful' for a person to live in debt. The richest Americans have loads of debt. A significant part of the American Dream is to own a house wh

I don't think it's 'awful' for a person to live in debt. The richest Americans have loads of debt. A significant part of the American Dream is to own a house which is essentially debt. Perhaps the argument is more about whether the US government is drowning in debt more akin to CC debt (bad debt) or mortgage debt (good debt) but in the abstract, leverage is a perfectly fine thing for a government to use in order to fund its development.

logicchains 3y ago
The American dream is to "own" a house, not to own a mortgage.
- anon291 3y ago
  You do not own a mortgage. You have sold a mortgage.
nxm 3y ago
Debt is also how economies and a lot of companies grow
- HideousKojima 3y ago
  They could also grow by saving and reinvesting surpluses/profits
  - intotheabyss 3y ago
    The entire point of debt is to bring future revenue to the present so that you don't have to wait for savings to trickle in every year.
    - HideousKojima 3y ago
      At the cost of some portion of your future revenue
      - airstrike 3y ago
        and if that future revenue is N times greater than you would otherwise get without debt, then it's still better to take on debt. Would you rather have 90% of $1M or 100% of $800k?
        HideousKojima 3y ago
        >if That single word is doing all of the heavy lifting for you. "If" the housing market will never crash, then it's a surefire safe investment! Better buy tons of houses to flip on credit. There's no guarantee that your debt/investment will succeed, which is why banks try (and often enough, fail) to price in risk with things like varying interest rates, collateral, etc.
        airstrike 3y ago
        the 90% accounts for the "if". my point is there an expected value for the future revenue amount, subject to your own assumptions about the probability of each outcome and your discount rate for the value of that money over time in scenarios where your expected value discounted to present value is greater than the alternative, you make the investment. it's really finance 101... it's just NPV
  - grotorea 3y ago
    AFAIK the standard economic opinion is that this is suboptimal and leads to underinvestment.
  - scatters 3y ago
    No, they couldn't. One person's savings is another person's debt. If everyone tries to save then no one can; this is the paradox of thrift.
    - HideousKojima 3y ago
      https://en.m.wikipedia.org/wiki/Paradox_of_thrift#Criticisms https://en.m.wikipedia.org/wiki/Paradox_of_thrift#Criticisms Just because someone gives it a formal name doesn't mean it's true. >One person's savings is another person's debt. Only if you treat fiat currency (or bank deposits in general, the paradox you mention was formulated long before we got off the gold standard) as the only possible form of savings.
      - scatters 3y ago
        Sticking gold in a vault is only a means to saving if you have a reasonable expectation that when you take it out you can use it to obtain goods and services. It is thus a disguised claim on future production, and so relies on debt to exactly the same degree as bank money.

logicchains 3y ago

The American dream is to "own" a house, not to own a mortgage.

anon291 3y ago
You do not own a mortgage. You have sold a mortgage.

nxm 3y ago

Debt is also how economies and a lot of companies grow

HideousKojima 3y ago
They could also grow by saving and reinvesting surpluses/profits
- intotheabyss 3y ago
  The entire point of debt is to bring future revenue to the present so that you don't have to wait for savings to trickle in every year.
  - HideousKojima 3y ago
    At the cost of some portion of your future revenue
    - airstrike 3y ago
      and if that future revenue is N times greater than you would otherwise get without debt, then it's still better to take on debt. Would you rather have 90% of $1M or 100% of $800k?
      - HideousKojima 3y ago
        >if That single word is doing all of the heavy lifting for you. "If" the housing market will never crash, then it's a surefire safe investment! Better buy tons of houses to flip on credit. There's no guarantee that your debt/investment will succeed, which is why banks try (and often enough, fail) to price in risk with things like varying interest rates, collateral, etc.
        airstrike 3y ago
        the 90% accounts for the "if". my point is there an expected value for the future revenue amount, subject to your own assumptions about the probability of each outcome and your discount rate for the value of that money over time in scenarios where your expected value discounted to present value is greater than the alternative, you make the investment. it's really finance 101... it's just NPV
- grotorea 3y ago
  AFAIK the standard economic opinion is that this is suboptimal and leads to underinvestment.
- scatters 3y ago
  No, they couldn't. One person's savings is another person's debt. If everyone tries to save then no one can; this is the paradox of thrift.
  - HideousKojima 3y ago
    https://en.m.wikipedia.org/wiki/Paradox_of_thrift#Criticisms https://en.m.wikipedia.org/wiki/Paradox_of_thrift#Criticisms Just because someone gives it a formal name doesn't mean it's true. >One person's savings is another person's debt. Only if you treat fiat currency (or bank deposits in general, the paradox you mention was formulated long before we got off the gold standard) as the only possible form of savings.
    - scatters 3y ago
      Sticking gold in a vault is only a means to saving if you have a reasonable expectation that when you take it out you can use it to obtain goods and services. It is thus a disguised claim on future production, and so relies on debt to exactly the same degree as bank money.