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i think this fellow is right on the money. our economy borrows against future real growth to finance itself, and that will never work in the long term - that r

i think this fellow is right on the money. our economy borrows against future real growth to finance itself, and that will never work in the long term - that real growth is physically constrained, but the debt is not. just look at our national debt - our economy will never grow fast enough in real wealth terms to be able to pay back the debt that is accumulating much faster. debt is just a number on paper, without bound. growth has to contend with the real world.

jwilliams 18y ago
So - What's the alternative to debt to fund growth? Or are you saying we should contract?
- jibiki 18y ago
  The author's suggestion seems to be that local governments should pay people directly for creating resources (like his example of receipts for grain.) I'm a little skeptical about how well that model works in the real world. It's worth noting the parallels though, between the weird socialism he seems to be proposing and our current system. In our system, the fed creates money and lends it to the banks, at interest, so that they can lend that money to productive people. In his world, local governments would just give money directly to productive people. Frankly, I think that's bound to be less inefficient, even though it's more direct.
  - jwilliams 18y ago
    Exactly - it's all debt of some form - To be honest, I didn't really get a clear picture of his scheme from the article. It seems like he's advocating a highly decentralised form of debt? So maybe this is great from a community perspective - but it kind of sucks for something bigger... Like a Google or a Stem Cell breakthough.
  - kiba 18y ago
    I thought he was advocating free market money where good money earned their way on the marketplace.
- asciilifeform 18y ago
  > we should contract Why is this off the table? "Growth for the sake of growth is the philosophy of the cancer cell."
Xichekolas 18y ago
Why must we pay off the national debt? It's not like the US Government is going to get old and lose it's income (like a person that retires would). Provided the economy grows (and tax receipts grow along with it) the government has an ever-increasing ability to service its debt. Just look at the ratio of tax receipts to interest on the debt. The recent financial crisis has obviously made it dive a bit, but in general it's been quite steady or increasing over the last half century or so. In the corporate world, this figure is known as Times Interest Earned, and is a generally accepted measure of credit quality of a company. Paying back the principal is less of a concern, because when it comes due, there is always a willing buyer of another t-bill to roll it over. With some pretty charts: http://www.optimist123.com/optimist/2008/12/the-usas-debt-burden-according-to-the-tit-ratio.html http://www.optimist123.com/optimist/2008/12/the-usas-debt-bu...
- bprater 18y ago
  Why pay off debt? First, it seems like the honorable thing to do. Honor? Right thing to do? In the US? I guess we lost that a long time ago. If money that is servicing debt were freed up, wouldn't it be logical that it could flow to other useful places?
  - jwilliams 18y ago
    First, it seems like the honorable thing to do. Paying off debt and defaulting on debt are two different concepts. Most companies are permanently in debt in some fashion.
  - Xichekolas 18y ago
    Well the idea of borrowing is that you use the money in useful ways (yeah, I know that is debatable with the government). It'd be splendid if we could pay for everything out of cashflow (tax receipts), but things like wars and economic crises come along and require borrowing in big lumps. You could ask the same thing of any borrower... "wouldn't all that money spent servicing your mortgage or bond issue be better used elsewhere?" ... to which they would reply: "but that mortgage bought me a house, that bond issue allowed us to expand overseas". As for honorable, that is just misleading. The people loaning money to the government aren't victims, they are earning interest on a (virtually) risk-free investment. The national debt is not an expropriation of private capital... T-bills are offered for sale and buyers agree to their terms voluntarily.

jwilliams 18y ago

So - What's the alternative to debt to fund growth? Or are you saying we should contract?

jibiki 18y ago
The author's suggestion seems to be that local governments should pay people directly for creating resources (like his example of receipts for grain.) I'm a little skeptical about how well that model works in the real world. It's worth noting the parallels though, between the weird socialism he seems to be proposing and our current system. In our system, the fed creates money and lends it to the banks, at interest, so that they can lend that money to productive people. In his world, local governments would just give money directly to productive people. Frankly, I think that's bound to be less inefficient, even though it's more direct.
- jwilliams 18y ago
  Exactly - it's all debt of some form - To be honest, I didn't really get a clear picture of his scheme from the article. It seems like he's advocating a highly decentralised form of debt? So maybe this is great from a community perspective - but it kind of sucks for something bigger... Like a Google or a Stem Cell breakthough.
- kiba 18y ago
  I thought he was advocating free market money where good money earned their way on the marketplace.
asciilifeform 18y ago
> we should contract Why is this off the table? "Growth for the sake of growth is the philosophy of the cancer cell."

Xichekolas 18y ago

Why must we pay off the national debt? It's not like the US Government is going to get old and lose it's income (like a person that retires would). Provided the economy grows (and tax receipts grow along with it) the government has an ever-increasing ability to service its debt. Just look at the ratio of tax receipts to interest on the debt. The recent financial crisis has obviously made it dive a bit, but in general it's been quite steady or increasing over the last half century or so. In the corporate world, this figure is known as Times Interest Earned, and is a generally accepted measure of credit quality of a company. Paying back the principal is less of a concern, because when it comes due, there is always a willing buyer of another t-bill to roll it over. With some pretty charts: http://www.optimist123.com/optimist/2008/12/the-usas-debt-burden-according-to-the-tit-ratio.html http://www.optimist123.com/optimist/2008/12/the-usas-debt-bu...

bprater 18y ago
Why pay off debt? First, it seems like the honorable thing to do. Honor? Right thing to do? In the US? I guess we lost that a long time ago. If money that is servicing debt were freed up, wouldn't it be logical that it could flow to other useful places?
- jwilliams 18y ago
  First, it seems like the honorable thing to do. Paying off debt and defaulting on debt are two different concepts. Most companies are permanently in debt in some fashion.
- Xichekolas 18y ago
  Well the idea of borrowing is that you use the money in useful ways (yeah, I know that is debatable with the government). It'd be splendid if we could pay for everything out of cashflow (tax receipts), but things like wars and economic crises come along and require borrowing in big lumps. You could ask the same thing of any borrower... "wouldn't all that money spent servicing your mortgage or bond issue be better used elsewhere?" ... to which they would reply: "but that mortgage bought me a house, that bond issue allowed us to expand overseas". As for honorable, that is just misleading. The people loaning money to the government aren't victims, they are earning interest on a (virtually) risk-free investment. The national debt is not an expropriation of private capital... T-bills are offered for sale and buyers agree to their terms voluntarily.