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Maybe because in the actual world, the debts of a government that has its own sovereign currency are not actually very much like the debts you may incur when bu

Maybe because in the actual world, the debts of a government that has its own sovereign currency are not actually very much like the debts you may incur when buying a car or a house or using a credit card.

deleted 3y ago
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ipaddr 3y ago
They are. Interest must be paid and that money could fund so much. Lowering your debit is important.
- PaulDavisThe1st 3y ago
  The USA seems quite happy to spend freely on anything it (i.e. the current federal government) deems worthy of a few billion dollars. Wars, in particular, are spending goals that come with few, if anym limits. I see little evidence that interest payments on the debt prevent funding particular programs - that is a political decision that for better or worse exists outside the realities of federal tax revenues.
  - somenameforme 3y ago
    The way the government 'prints money' is by issuing treasuries - give me $100 today and I'll give you $105 next year or whatever. The rates required to issue those treasuries, and the publics acceptance of such, is going to be a reflection of the perceived strength of your economy. US 30 year rates, which reflect long-term perceptions on the strength of an economy, are at highs not seen since the housing market crash. [1] When it becomes impossible for the government to print money without major consequences, it doesn't mean it's time to start cutting back on spending, rather at that point the entire economy would likely collapse in on itself in relatively short order. One can see economic issues coming from far away, but when they strike - the final collapse is often lightning quick. Again, see the housing market crash for an obvious example of such. There's also some interesting parallels and lessons one can take away from the Mexican peso crash, which was largely about 'creditors' losing faith in a currency. [2] [1] - https://tradingeconomics.com/usgg30y:ind https://tradingeconomics.com/usgg30y:ind [2] - https://en.wikipedia.org/wiki/Mexican_peso_crisis https://en.wikipedia.org/wiki/Mexican_peso_crisis
dataflow 3y ago
Nobody claimed national debt is very much like credit card debt. The fact that they're different doesn't mean they can't both cripple you. This "explanation" (which I've seen far too many times to count) doesn't explain anything. It's just a refusal to consider the question.
- PaulDavisThe1st 3y ago
  There are some good MMT textbooks out there. You're not going to get a full "explanation" in a HN comment thread. Note that typical household debt:income ratios are far higher than the national debt:income ratio is right now. Also note that it is critical to differentiate between "bad" debt and "good debt". When someone takes out a mortgage to buy a house, almost nobody will say that the purchaser is stupid and going into ridiculous debt. When someone takes out a bank loan to spend another weekend at the casino, almost nobody will suggest that there is anything sane about what they are doing. The same applies to national spending also.
  - dataflow 3y ago
    I'm not expecting a "full" explanation, just some explanation that makes sense on its face. People manage to explain quantum mechanics in HN comments and get the core ideas across qualitatively. Surely debt isn't harder. I have yet to see any explanation (including from your comment) on how interest on debts growing at the current rate can possibly be repaid into perpetuity without causing some kind of economic catastrophe down the road. > Note that typical household debt:income ratios are far higher than the national debt:income ratio is right now. The concern wasn't about "right now", but about "future generations". (And you'd need to explain why household debt to income ratios are the critical metric here too, but that's secondary to this...) > Also note that it is critical to differentiate between "bad" debt and "good debt". When someone takes out a mortgage to buy a house, almost nobody will say that the purchaser is stupid and going into ridiculous debt. First, erm... are you sure about this? 85% of Americans beg to differ. [1] Second... do you really believe the amount of debt isn't a factor here? If the average American took out a $10 million mortgage, wouldn't you agree it's a terrible idea? (And if you do, then how in the world is "mortgages are good debt" a rebuttal to "we're taking on too much debt"?) Lastly: I'm not sure if you've missed it, but we've had quite a few articles and discussions lately on HN about how the current system has been transferring wealth from younger generations to older ones. And don't forget [2], which has been changing the real estate landscape over the decades. Lots of people aren't buying the idea that the growth on investments that older generations are seeing can be sustained perpetually for future generations. > When someone takes out a bank loan to spend another weekend at the casino, almost nobody will suggest that there is anything sane about what they are doing. The same applies to national spending also. Just because you can find debt that everyone presumably agrees is bad, that doesn't mean ballooning amounts of other debts aren't problematic. If you're going to argue by analogy, consider this: "a little bit of salt is good for you" + "a lot of lead is bad for you" do not imply "a lot of salt is good for you". [1] https://www.npr.org/2023/11/13/1212737835/many-say-its-a-bad-time-to-buy-a-house-so-whos-still-going-for-it https://www.npr.org/2023/11/13/1212737835/many-say-its-a-bad... [2] https://www.nytimes.com/2022/04/23/us/corporate-real-estate-investors-housing-market.html https://www.nytimes.com/2022/04/23/us/corporate-real-estate-...

deleted 3y ago

[deleted]

ipaddr 3y ago

They are. Interest must be paid and that money could fund so much. Lowering your debit is important.

PaulDavisThe1st 3y ago
The USA seems quite happy to spend freely on anything it (i.e. the current federal government) deems worthy of a few billion dollars. Wars, in particular, are spending goals that come with few, if anym limits. I see little evidence that interest payments on the debt prevent funding particular programs - that is a political decision that for better or worse exists outside the realities of federal tax revenues.
- somenameforme 3y ago
  The way the government 'prints money' is by issuing treasuries - give me $100 today and I'll give you $105 next year or whatever. The rates required to issue those treasuries, and the publics acceptance of such, is going to be a reflection of the perceived strength of your economy. US 30 year rates, which reflect long-term perceptions on the strength of an economy, are at highs not seen since the housing market crash. [1] When it becomes impossible for the government to print money without major consequences, it doesn't mean it's time to start cutting back on spending, rather at that point the entire economy would likely collapse in on itself in relatively short order. One can see economic issues coming from far away, but when they strike - the final collapse is often lightning quick. Again, see the housing market crash for an obvious example of such. There's also some interesting parallels and lessons one can take away from the Mexican peso crash, which was largely about 'creditors' losing faith in a currency. [2] [1] - https://tradingeconomics.com/usgg30y:ind https://tradingeconomics.com/usgg30y:ind [2] - https://en.wikipedia.org/wiki/Mexican_peso_crisis https://en.wikipedia.org/wiki/Mexican_peso_crisis

dataflow 3y ago

Nobody claimed national debt is very much like credit card debt. The fact that they're different doesn't mean they can't both cripple you. This "explanation" (which I've seen far too many times to count) doesn't explain anything. It's just a refusal to consider the question.

PaulDavisThe1st 3y ago
There are some good MMT textbooks out there. You're not going to get a full "explanation" in a HN comment thread. Note that typical household debt:income ratios are far higher than the national debt:income ratio is right now. Also note that it is critical to differentiate between "bad" debt and "good debt". When someone takes out a mortgage to buy a house, almost nobody will say that the purchaser is stupid and going into ridiculous debt. When someone takes out a bank loan to spend another weekend at the casino, almost nobody will suggest that there is anything sane about what they are doing. The same applies to national spending also.
- dataflow 3y ago
  I'm not expecting a "full" explanation, just some explanation that makes sense on its face. People manage to explain quantum mechanics in HN comments and get the core ideas across qualitatively. Surely debt isn't harder. I have yet to see any explanation (including from your comment) on how interest on debts growing at the current rate can possibly be repaid into perpetuity without causing some kind of economic catastrophe down the road. > Note that typical household debt:income ratios are far higher than the national debt:income ratio is right now. The concern wasn't about "right now", but about "future generations". (And you'd need to explain why household debt to income ratios are the critical metric here too, but that's secondary to this...) > Also note that it is critical to differentiate between "bad" debt and "good debt". When someone takes out a mortgage to buy a house, almost nobody will say that the purchaser is stupid and going into ridiculous debt. First, erm... are you sure about this? 85% of Americans beg to differ. [1] Second... do you really believe the amount of debt isn't a factor here? If the average American took out a $10 million mortgage, wouldn't you agree it's a terrible idea? (And if you do, then how in the world is "mortgages are good debt" a rebuttal to "we're taking on too much debt"?) Lastly: I'm not sure if you've missed it, but we've had quite a few articles and discussions lately on HN about how the current system has been transferring wealth from younger generations to older ones. And don't forget [2], which has been changing the real estate landscape over the decades. Lots of people aren't buying the idea that the growth on investments that older generations are seeing can be sustained perpetually for future generations. > When someone takes out a bank loan to spend another weekend at the casino, almost nobody will suggest that there is anything sane about what they are doing. The same applies to national spending also. Just because you can find debt that everyone presumably agrees is bad, that doesn't mean ballooning amounts of other debts aren't problematic. If you're going to argue by analogy, consider this: "a little bit of salt is good for you" + "a lot of lead is bad for you" do not imply "a lot of salt is good for you". [1] https://www.npr.org/2023/11/13/1212737835/many-say-its-a-bad-time-to-buy-a-house-so-whos-still-going-for-it https://www.npr.org/2023/11/13/1212737835/many-say-its-a-bad... [2] https://www.nytimes.com/2022/04/23/us/corporate-real-estate-investors-housing-market.html https://www.nytimes.com/2022/04/23/us/corporate-real-estate-...