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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" (

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-...
  - PaulDavisThe1st 3y ago
    I think that since most people accept that typical household debt to income ratios are not catastrophic, it would be incumbent on someone who wants to argue that the same ratio for a sovereign national currency is a problem to explain why there is a difference. Otherwise, they are both just debts that are assumed to be paid off with future income or capital gains realization. Yes, I'm well aware of how the real estate market and its machinations, particularly in the anglosphere, has been a major driver of one of the more widespread but still pernicious wealth redistributions of the last 30-50 years (probably not the worst one, but an important one). I don't think that this is particularly germane to the question of the national debt compared to anything else. Sure, taking on insane levels of debt is a bad idea. The problem in the national context is getting agreement on what insane means. For a household earning $100k/yr, $10M of debt is insane. For a country with a GDP of $23 trillion, what's an insane amount of debt? (sorry for the delay, learning how to be a firefighter in the daytime hours right now)
- AnimalMuppet 3y ago
  Are you seriously arguing that what the federal government is going into debt to do is "good debt" rather than "bad debt"? They're going (further) into debt to fund continuing operations, not just for infrastructure investments. Also, there may be some good (convincing) MMT textbooks out there. There are also a much larger number of good non-MMT textbooks out there. Why should we believe the MMT ones rather than the more-generally-accepted non-MMT ones? "This opinion exists and has been clearly explained" does not imply we should either believe it or put it into practice.

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-...
- PaulDavisThe1st 3y ago
  I think that since most people accept that typical household debt to income ratios are not catastrophic, it would be incumbent on someone who wants to argue that the same ratio for a sovereign national currency is a problem to explain why there is a difference. Otherwise, they are both just debts that are assumed to be paid off with future income or capital gains realization. Yes, I'm well aware of how the real estate market and its machinations, particularly in the anglosphere, has been a major driver of one of the more widespread but still pernicious wealth redistributions of the last 30-50 years (probably not the worst one, but an important one). I don't think that this is particularly germane to the question of the national debt compared to anything else. Sure, taking on insane levels of debt is a bad idea. The problem in the national context is getting agreement on what insane means. For a household earning $100k/yr, $10M of debt is insane. For a country with a GDP of $23 trillion, what's an insane amount of debt? (sorry for the delay, learning how to be a firefighter in the daytime hours right now)
AnimalMuppet 3y ago
Are you seriously arguing that what the federal government is going into debt to do is "good debt" rather than "bad debt"? They're going (further) into debt to fund continuing operations, not just for infrastructure investments. Also, there may be some good (convincing) MMT textbooks out there. There are also a much larger number of good non-MMT textbooks out there. Why should we believe the MMT ones rather than the more-generally-accepted non-MMT ones? "This opinion exists and has been clearly explained" does not imply we should either believe it or put it into practice.