A Layman's Understanding of Debt
POSTED BY: AnthonyT
UPDATED: Wednesday, May 21, 2025 00:28
VIEWED: 4246
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Quote:A capitalist nation CAN'T "borrow money forever" because it will either eventually go broke or create more currency to pay it's debt. OTOH it can't NOT "borrow money forever" because then currency circulation will eventually grind to a halt. That is the essential conundrum of capitalism: it's unsustainable in the long run. And that's where we are now: At the point where capitalism "breaks" and turns into a depression. But in the sort run, "we" have several separate problems:
If the average person (me) can not have the system of 'borrowing more money forever' explained to them in a way that makes sense, then I can't be expected to select leaders who will implement fiscally responsible policies for this country. And that makes me a sad panda. Worse, if no one can explain to me how 'borrowing more money forever' is going to work, I might elect people into office who won't do it. And, if 'borrowing more money forever' is a sound fiscal practice, I may inadvertently break the country.
Federal deficit
Trade deficit
Personal debt ("Main Street")
Business debt ("Wall Street")
Thanks to Bush's profligate spending, the Federal deficit is out of control.
Thanks ot America's desire for cheap goods, our trade deficit is out of control.
Thanks to the reduction in real wages over the past eight years, our personal debt is out of control.
And thanks to corporate greed and malfeasance, business debt is out of control.
We can't solve ALL of these problems at once. One or more problems will have to go unsolved in the short run even tho they are ALL significant. IMHO the best solution is to put the typical American back into solvency by undoing the massive concentration of wealth that GWB engineered over the past eight years. That means "spread the wealth" by taxing the rich and giving to the poor.
Additionally, once wealth is placed into the hands of consumers, we have to make sure that wealth is spent on AMERICAN goods to create AMERICAN jobs so it doesn't just "leak" to China. For one thing, we could insist that China be as open to our products as we are to theirs, or we start slapping trade restrictions on imports. OR we focus in raising the incomes of "service" jobs like teachers, day-care workers and nurses. Or we focus on a jobs-program like infrastructure, or on investments towards a new kind of energy production - and leave China in the (coal) dust.
But in the short run, I don't see our federal deficit going down. That will have to be tackled a few years from now.
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Let's party like its 1929.
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Where is Chrisisall in this conversation? The next great depression is the backdrop of the Dark Angel future.
Do not fear me. Our's is a peaceful race and we must live in harmony.
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Quote:
Originally posted by AnthonyT:
Hello,
As an aside, Out...
I know you probably are trying for some good natured ribbing by suggesting that Hero is a mental defective, but it's not that funny, and is particularly not earned. Hero was simply contributing to the conversation. We don't need to belittle people whose ideas we disagree with. And we ought to focus our arguments on ideas, not people.
--Anthony
"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner
My comment was intended as a good-natured poke in his ribs , nothing less , nothing more...
It was just a tease , no offense intended , none deliberately implied...
No one should infer more than was necessary to 'get' the joke , particularly not Hero...
Not to put too fine a point on it , but brain surgery IS a serious matter...I think that is what he intended to say , in so many words...
I just had a little fun with the WAY he said it...Sorry if that offended anyone .
I expect that Hero knows how to take the joke , but if he doesn't , I'm sure I'll hear from him about it...
No one should feel discouraged about conveying their point of view...
But , your point is well taken , AnthonyT , so I'll take it under advisement for the next occasion...
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Quote:
Originally posted by rue:
ahem ! ...
stocks and bonds go back hundreds of years:
No one said they didn't .
Fiscal responsibility goes back thousands of years...
As does self-reliance and 'Independence'.
Making money using 'other peoples money' also goes back thousands of years...
For as long as people have had objects of value , there have been systems of trading those valuable objects...
Nothing about that is in dispute...
But , the discussion is concerning our present-day unsustainable governmental and economic practices...
Any historical information should inform and be particularly relevant to our present concerns , and how to address those matters .
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"we have to make sure that wealth is spent on AMERICAN goods to create AMERICAN jobs so it doesn't just "leak" to China."
Hello,
I've been thinking about this.
When I was a young child, the U.S. made televisions and radios and cars and computers and cameras and clothes and all kinds of things.
Do we still manufacture the full gamut of consumer items? If we all wanted to 'buy American' could we?
Lately it seems to me the only things we produce are foodstuffs and war machines.
--Anthony
"Liberty must not be purchased at the cost of Humanity." --Captain Robert Henner
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OTB
I was addressing your post
"Hasn't always been so... A hundred years ago , it was still common practice for both businesses and households to have a fund (savings) that were called a 'sinking fund'... It was 'seed money' for capital expansion or rainy days...
At the time it made complete sense , because even Common Folk had the Constitutionally-prescribed Gold & Silver Coin , that was resistant to the inflationary trends common to the 'paper' currencies...
A 'buck' was a buck...
'Savings' made sense...And Banking Dynasties had yet to secure complete control of the finances of the United States..."
You implied that stocks, bonds and borrowing to finance future gain were rarities. Nothing could be further from the truth.
Here are some definitions of 'sinking fund'
First, understand that a sinking fund provision is really just a pool of money set aside by a corporation to help repay a bond issue.
A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can soften the financial impact at maturity. Investors prefer bonds and debentures backed by sinking funds because there is less risk of a default.
A fund accumulated to pay off a corporate or public debt.
Rather than a fund set up to accumulate money for investment as you said, they are in fact a fund set up to pay off debt.
Then, well, you went on your usual rant about gold and silver which really doesn't add to the discussion.
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Silence is consent.
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It would require re-investment in our manufacturing capacity... in itself a producer of jobs.
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Let's party like its 1929.
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Quote:
Originally posted by rue:
I was addressing your post
...You implied that stocks, bonds and borrowing to finance future gain were rarities. Nothing could be further from the truth.
Here are some definitions of 'sinking fund'
...Then, well, you went on your usual rant about gold and silver which really doesn't add to the discussion.
No , you weren't...
You inferred something that I neither stated , nor implied...
Black's LAW DICTIONARY : sinking fund
" In General Accounting , segregated assets that are being accumulated for a specific purpose..."
What you're doing is attempting to apply modern definitions to a situation that was commonplace a century ago...
Once again , historical context is important , to the extent that it informs our discussion in the present day...
The Gold and Silver issue is not a 'rant' ; it is rather , a Constitutional Mandate...
Have you ever had one of those , a mandate ?
Article 1 , Section 8 , US Constitution :
Duties of Congress :
" To coin Money , regulate the Value thereof , and of foreign Coin , and fix the Standard of Weights and Measures ; "
And ,
Article 1 , Section 10 :
" No State shall enter into any Treaty , Alliance , or Confederation ;
grant Letters of Marque or Reprisal ; coin Money ; emit Bills of Credit ; make any Thing but gold and silver Coin a Tender in Payment of Debts ; etc , etc...
Only gold and silver coin is Lawful Money...
Only Congress can authorize the issuance of coined Money , and regulate the Value thereof...
You get it ?
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Quote:
Originally posted by AnthonyT:
...When I was a young child, the U.S. made televisions and radios and cars and computers and cameras and clothes and all kinds of things.
Do we still manufacture the full gamut of consumer items? If we all wanted to 'buy American' could we?
Lately it seems to me the only things we produce are foodstuffs and war machines.
--Anthony
A barrel of oil should be linked to a bushel of grain , pricewise...
If the oil producers of OPEC decide that they would like to eat , they will begin to see this as a good deal...
Aside from that , we can't make it here , anymore...
Something is wrong with that picture...
Why does the United States actually export
oil ?
We do...we really , really DO...
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Speaking of historical context -
" No State shall enter into any Treaty , Alliance , or Confederation ;
grant Letters of Marque or Reprisal ; coin Money ; emit Bills of Credit ; make any Thing but gold and silver Coin a Tender in Payment of Debts ..."
You do know what they meant by STATE --- right ?
They weren't referring to 'state' meaning 'country', they were talking about the STATES that comprised the United STATES. They didn't want each STATE issuing money which might or might not have value to a greater or lesser degree than that of other STATES and which would exist in competition with the national currency. Hence, they set restrictions on what STATES could mint as currency.
When it came to the federal government, I see no such restrictions. They reserved for the federal government the right to define national currency.
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Silence is consent.
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