3 ms·

> Because debt is money we owe to ourselves, it does not directly make the economy poorer This rational only works if you're thinking about the economy in coll

> Because debt is money we owe to ourselves, it does not directly make the economy poorer This rational only works if you're thinking about the economy in collective terms. If the U.S. government borrows money from future taxpayers and gives it to the poor today, yes, collectively it's a wash. But there are winners and losers individually: the lender got an interest payment, the poor person got some free money, and the future tax payer paid more taxes to cover both. Telling the future tax payer, "hey, don't worry, it was an economic wash since we just owe the debt to ourselves!" would be cold comfort as he or she is clearly poorer due to the increased tax burden.

novalis78 12y ago
wonder why this is not pointed out more often
- LanceH 12y ago
  Because the future taxpayer doesn't have a seat at the table.
  - novalis78 12y ago
    which points to an answer for jhulla's question: https://news.ycombinator.com/item?id=9023395 https://news.ycombinator.com/item?id=9023395 In a sense a modern form of oligarchy...bread and games go a long way.
savanaly 12y ago
Remember, money doesn't matter, only goods consumed (which money can facilitate). To help make this clear, imagine if G.O.D. materialized a bag with $10 trillion on the front steps of the white house. Would the world, past, present or future, to be able to consume more? Thus, it's hard to see how it's possible for the world as a whole to "borrow" from the future in any meaningful sense. How much you tax vs. how much debt you run up does matter, but not in the same way people think.
- john_b 12y ago
  When a country's debt grows faster than its real GDP over a long enough period of time, some sort of fiscal tightening ("austerity") will become necessary to avoid default. This may take the form of reduced spending, increased taxes, or both. Guess who will be paying for that? Future consumers and taxpayers. Not all debt leads to this. Debt which is incurred responsibly and paid off in a timely fashion promotes growth. But there are examples (Greece is one) where debt is used by those in power to sustain their own power structure rather than dealing with economic problems under their watch. To the extent that economic changes negatively affect the ruling elite, those in power will avoid making those changes. If those changes happen to be necessary to preserve future economic stability, then it will be future generations who pay for it.
  - jhulla 12y ago
    Completely agree. In 2008-2009, there was an opportunity to take apart big banks after their gross misallocation of capital. Instead those very banks and bankers were fortified and rewarded to continue onwards. I still haven't figured out how this phase will end.

novalis78 12y ago

wonder why this is not pointed out more often

LanceH 12y ago
Because the future taxpayer doesn't have a seat at the table.
- novalis78 12y ago
  which points to an answer for jhulla's question: https://news.ycombinator.com/item?id=9023395 https://news.ycombinator.com/item?id=9023395 In a sense a modern form of oligarchy...bread and games go a long way.

savanaly 12y ago

Remember, money doesn't matter, only goods consumed (which money can facilitate). To help make this clear, imagine if G.O.D. materialized a bag with $10 trillion on the front steps of the white house. Would the world, past, present or future, to be able to consume more? Thus, it's hard to see how it's possible for the world as a whole to "borrow" from the future in any meaningful sense. How much you tax vs. how much debt you run up does matter, but not in the same way people think.

john_b 12y ago
When a country's debt grows faster than its real GDP over a long enough period of time, some sort of fiscal tightening ("austerity") will become necessary to avoid default. This may take the form of reduced spending, increased taxes, or both. Guess who will be paying for that? Future consumers and taxpayers. Not all debt leads to this. Debt which is incurred responsibly and paid off in a timely fashion promotes growth. But there are examples (Greece is one) where debt is used by those in power to sustain their own power structure rather than dealing with economic problems under their watch. To the extent that economic changes negatively affect the ruling elite, those in power will avoid making those changes. If those changes happen to be necessary to preserve future economic stability, then it will be future generations who pay for it.
- jhulla 12y ago
  Completely agree. In 2008-2009, there was an opportunity to take apart big banks after their gross misallocation of capital. Instead those very banks and bankers were fortified and rewarded to continue onwards. I still haven't figured out how this phase will end.