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Paul Krugman on the overrated debt problem: http://krugman.blogs.nytimes.com/2016/1 ... straction/

I have read some articles about how debt isn't such a big deal. But I don't really buy it. We just shouldn't spend more than we bring in. Owing all this money with interest is a dumb idea, even if interest rates happen to be low at a given time. We get to a point where we have to spend a non-trivial amount of our yearly federal budget just to pay interest on the debt.

I agree at the very minimum we shouldn't be increasing our debt. Why should the government be different than our private households?

Superbone wrote:I agree at the very minimum we shouldn't be increasing our debt. Why should the government be different than our private households?

I agree in principle, but nearly every time someone buys a house or property, they are adding to their debt. Or taking out a student loan. Or a small business loan. There are many circumstances where it makes long-term sense to finance your way through a short-term issue. The problems occur when you become addicted to that and never get out from under it.

Indy wrote:

Superbone wrote:I agree at the very minimum we shouldn't be increasing our debt. Why should the government be different than our private households?

I agree in principle, but nearly every time someone buys a house or property, they are adding to their debt. Or taking out a student loan. Or a small business loan. There are many circumstances where it makes long-term sense to finance your way through a short-term issue. The problems occur when you become addicted to that and never get out from under it.

Of course there are exceptions. Even in those exceptions, you have to be smart about it. Buy too much house and then you become cash poor. Take out too much in student loans that's not commensurate with what kind of return you get on resultant jobs and then you are in trouble.

Exactly. I wasn't disagreeing with your initial statement, only pointing out exceptions. And I would bet that the vast majority of extremely successful people in this country either leveraged debt significantly at some point in their journey, or inherited a lot of money. Or both.

Indy wrote:Exactly. I wasn't disagreeing with your initial statement, only pointing out exceptions. And I would bet that the vast majority of extremely successful people in this country either leveraged debt significantly at some point in their journey, or inherited a lot of money. Or both.

I agree with 'Bone's initial statement, and I agree with your exceptions. But I do want to point out that you assume a definition of success something like: success = having a lot more money than you started with. I'm not sure that definition applies to governments. I haven't thought about it in these terms before, but the gov't is working to provide a nation in which we can be successful. What would count as success for a gov't apart from the success of it's people? I'm not even sure that makes sense, but that's my gut reaction.

Cap wrote:Paul Krugman on the overrated debt problem: http://krugman.blogs.nytimes.com/2016/1 ... straction/

I have a couple of problems with guys like Krugman just kind of brushing off debt as not a problem. Maybe I'm wrong, and I know I'm starting to sound a little like a conspiracy theorist here.

1. On the most basic level, it's not about the debt. It's about elected officials respecting and responding to the will of the people.
2. I really believe that entangled financial relationships can be just as dangerous as entangled military relationships turned out to be in WWI.
3. Except in extreme situations, no organization should do more than it's members can sustain. If your people can't afford it, they probably don't need it.
4. I know this sounds crazy, so maybe it is. These financial experts love money. I mean, they love it enough that that's all they want to think about for their whole careers. So when these guys say that "a little more money won't hurt and we could do all this good stuff with it", well, duh. That's what they say in every situation in life. Doesn't mean it applies here.

O_Gardino wrote:

Indy wrote:Exactly. I wasn't disagreeing with your initial statement, only pointing out exceptions. And I would bet that the vast majority of extremely successful people in this country either leveraged debt significantly at some point in their journey, or inherited a lot of money. Or both.

I agree with 'Bone's initial statement, and I agree with your exceptions. But I do want to point out that you assume a definition of success something like: success = having a lot more money than you started with. I'm not sure that definition applies to governments. I haven't thought about it in these terms before, but the gov't is working to provide a nation in which we can be successful. What would count as success for a gov't apart from the success of it's people? I'm not even sure that makes sense, but that's my gut reaction.

Then we are in agreement, because I wouldn't define success that way for a government either. Just pointing out a counter-point. I argue regularly (or at least every election cycle) when people say "I want to vote for [XXX] because he has run a business and knows how to do it" that the point of government is first and foremost, provide for its people, whereas the point of a business (especially, large, publicly traded ones) is to maximize its profits.

The tricky part is defining what we all mean when we say 'provide.'

O_Gardino wrote:

Cap wrote:Paul Krugman on the overrated debt problem: http://krugman.blogs.nytimes.com/2016/1 ... straction/

I have a couple of problems with guys like Krugman just kind of brushing off debt as not a problem. Maybe I'm wrong, and I know I'm starting to sound a little like a conspiracy theorist here.

1. On the most basic level, it's not about the debt. It's about elected officials respecting and responding to the will of the people.
2. I really believe that entangled financial relationships can be just as dangerous as entangled military relationships turned out to be in WWI.
3. Except in extreme situations, no organization should do more than it's members can sustain. If your people can't afford it, they probably don't need it.
4. I know this sounds crazy, so maybe it is. These financial experts love money. I mean, they love it enough that that's all they want to think about for their whole careers. So when these guys say that "a little more money won't hurt and we could do all this good stuff with it", well, duh. That's what they say in every situation in life. Doesn't mean it applies here.

I don't think any of that sounds crazy or like a conspiracy theory. And you point around #2 is very apropos.

I agree with all of that. Our debt is way too high. Interest rates are low but, 20 trillion? We need to pay it down.

The US debt doesn't seem that complicated to me. I know I am ignorant in the details but, on the basic level you have income and expenditures. If you balance those you don't add to the debt. Our US govenment income comes from taxes mostly. Better economies produce more tax revenues. You want to pay off the debt? Raise taxes and cut spending.

What to cut?

Who to raise taxes on?

How much do lobbyists effect what we spend?

How much wasted money is spent every year? An aircraft carrier gets a budget every year. If they don't spend all of their budget that year their budget goes down the next year. They end up throwing all their pots and pans overboard in order to have to buy more in order to finish off their budget for the year. Just one example.

O_Gardino wrote: 4. I know this sounds crazy, so maybe it is. These financial experts love money. I mean, they love it enough that that's all they want to think about for their whole careers. So when these guys say that "a little more money won't hurt and we could do all this good stuff with it", well, duh. That's what they say in every situation in life. Doesn't mean it applies here.

Krugman isn't espousing some fringe crackpot theory. He's talking mainstream textbook economics. Are you poor-poohing the entire field of study because its practitioners think about money? That is crazy.

Cap wrote:

O_Gardino wrote: 4. I know this sounds crazy, so maybe it is. These financial experts love money. I mean, they love it enough that that's all they want to think about for their whole careers. So when these guys say that "a little more money won't hurt and we could do all this good stuff with it", well, duh. That's what they say in every situation in life. Doesn't mean it applies here.

Krugman isn't espousing some fringe crackpot theory. He's talking mainstream textbook economics. Are you poor-poohing the entire field of study because its practitioners think about money? That is crazy.

No, I think he is saying that asking for feedback only from generals on what to do with funding for the military isn't a wise choice, as they make their living off of the military system. The same is true for any field.

Indy wrote:

Cap wrote:

O_Gardino wrote: 4. I know this sounds crazy, so maybe it is. These financial experts love money. I mean, they love it enough that that's all they want to think about for their whole careers. So when these guys say that "a little more money won't hurt and we could do all this good stuff with it", well, duh. That's what they say in every situation in life. Doesn't mean it applies here.

Krugman isn't espousing some fringe crackpot theory. He's talking mainstream textbook economics. Are you poor-poohing the entire field of study because its practitioners think about money? That is crazy.

No, I think he is saying that asking for feedback only from generals on what to do with funding for the military isn't a wise choice, as they make their living off of the military system. The same is true for any field.

Something like what Indy said. Or maybe, "When all you have is a hammer, everything looks like a nail."