Quote:
Originally Posted by CJ7
from day 1 this country financed its expenditures by borrowing money ... apparently your founding fathers in 1790 thought it was a good idea..
simple isn't it ?
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Come on you guys. This is like "Sugar is good", "Water is good", "Oxygen is good". Not if you eat 10 pounds, drown or light a match in 100%. Please don't be simple when it suits you COG (it insults everyone's intelligence and you are better than that). I have read far too many of your posts over the years to buy that.
Yes, COG,
debt is good. The founding fathers found it necessary, not necessarily good, but the situation was far different in 1790. Debt and its consequences have to be understood and properly managed, just like debt in a family, business, state or city. National debt is structurally different though because a country is sovereign (not part of the private sphere) and a currency issuer.
Jackie_S - "In simple terms" a country with a fiat monetary system is like if you had a money tree in the back yard or a N. Korean Superbill printing press in your basement.
Simple fact is that the six times the U.S. worked to pay off the debt quickly we immediately went into a serious recession or depression. The one time in U.S. history when the country was debt free lasted exactly one year and headed us into a serious depression. Now that was all on the Gold Standard and fiat monetary systems operate differently in some ways, but paying off all the debt would cause serious problems because
public sector debt = private sector savings. Think about it please. The government prints and spends $1 (doesn't borrow because it is the first dollar and there is no one to borrow it from). How does the accounting work (double entry ledger). Government now has $1 debt, public sector has $1 savings. Government then taxes .10 and borrows .10 from the private sector. Government now has $1.20 debt, public sector has $.80 savings. If the government has no debt then there is no currency for the private sector. Eliminating all debt is
NOT good.
Our entire modern civilization is built on lending and debt. Up until the last century, pretty much only countries and rich people could borrow, but there has been a transformation, especially since the 1970s when I remember my dad got his first Amex, that has transformed our society.
Too much debt is bad, but few agree on what is "too much". There was a paper in 2010 that supposedly "proved" that debt at or above 90% of GDP would completely choke growth. When they released their data and methodology it was shown to be fatally flawed however.
National debt is quite a different thing than individual or business debt because nations are sovereign currency issuers. The situation has changed quite a bit as well in the last 40 years since all 200 or so countries in the world have ended convertibility and have fiat monetary systems. Also, trade deficits (ours is about $4.5 Billion) play into National Debt figures, not just "borrowing". This isn't a particularly simple topic, but it isn't brain surgery or rocket science either so it can be understood by the common man with a little diligence.
Try this brain teaser if you dare. If a country that prints its own money has to either "tax" or "borrow" to run the government, who did it "tax" or "borrow" from to run the government before it printed the first currency? If you figured out that a sovereign country with a fiat monetary system does not
HAVE to "tax" or "borrow" to run the government (obviously it can choose to do those) then why does it "tax" or "borrow?
and relax... THE END isn't near, this is America
