Well, I think what I was trying to hint at was that in order for you to accumulate interest on your investment, those dollars have to be in circulation. You cannot have more money than what is currently available through the fed; so in this sense, those dollars you earn through your investments have to be re-paid with interest. I think debt is proportionate, because it's a percentage, right? It doesn't matter if you borrow $1 or $1,000 - you owe a percentage back as interest. And in order to pay back that interest you have to borrow more, which means you get further into debt!
this would have been a relevant comparison if a government was a family. except it isnt. and many people owe much more than what they make in a year. ever get a mortgage for a house? buy a car? a boat? you pay for that shit with cash?
People used to. LOL Thanks Fed! Here's the worst part. None of what the Government spends is "their" money - it's ours and the future generations. We are the poor bastards that have to pay for all this nonsensical bullshit and with ever depreciating fiat money. You say keep the printing presses going, I say hello hyperinflation. {sarcastic tone} "It's like, it takes a genius to predict that if you print a lot of money it loses value" -Ron Paul {/sarcastic tone}
people used to because financial intermediation used to be inefficient. and they dont understand paying cash bears the opportunity cost of what they could do with that money. if you can invest with 6% return you'd be a fool to spend cash on something you could have gotten a loan for at between 4 and 5% "it's like, it takes a genius to believe the value of an economy doesnt grow as the money supply grows." -marianas {/sarcastic tone}
The Debt Crisis Cannot Be Solved with More Debt - David Saied - Mises Daily CREDIT CREATION OR FINANCIAL INTERMEDIATION?: FRACTIONAL-RESERVE BANKING IN A GROWING ECONOMY Repudiating the National Debt - Murray N. Rothbard - Mises Daily Government Debt Has No Upside - Robert P. Murphy - Mises Daily It's been boom/bust, repeat for as long as we can remember...we are in a very bad position right now.
I don't understand what you're saying. You don't have to borrow money to invest. They don't owe 5+ times what they make in a year. It's almost as if you didn't read my post. Families or even a company/business/corporation would have to account for unfunded liabilities, and the unfunded liabilities for Medicare, Medicaid, Social Security and government pensions are so massive that the government is basically insolvent by any modern accounting standard. I'm not against borrowing, but borrowing too much is a good way to go bankrupt.
Marianas, that does not help my question. It's too early to dissect the meaning of that information, so pardon me if I sound rude in skipping over the graph, but could you answer me a two-part question? I'm just trying to get my head 'round this, I know this is the politics section and therefore an inherent war zone, but let's look at this from the perspective of two adults conversing about the foundations of our monetary system. Whatever money you accumulate through investments has to be borrowed from the fed in order to be in circulation. Is that an accurate statement? If that is true, then however much you make from will never outweigh the interest on the debt, right? You'd go bankrupt before you paid it all off, because every dollar in your account is borrowed with interest.
How else would you have money to invest? Every dollar is borrowed I think I see the fine line between our trains of thought. I'm saying on a larger communal scale, in order to invest money it has to be borrowed - perhaps not by the individual.
You can gain money through trading your labor for money. I think that is the usual way people acquire savings.
i think i understand where you're coming from now. money is "created" when the central bank purchases assets in our case government treasuries. you can think of this as a value of the asset for which is now in the open market and the value of the the loan which are known future interest payment(s). at this point the fed holds the asset and entity1 which lets pretend is a bank makes a loan with the cash it receives from the fed to customer to start a marijuana dispensary. both the bank and the dispensary pays a portion of their income as tax to the treasury department, and this payment in theory needs to cover the interest payment it makes to the fed. so in summation, economic growth is what pays off the original interest and all subsequent ones. this is also observable during recessions as credit dramatically decrease because like i previously mentioned- the payments are a known variable whereas income is not.
dont they owe more than 5x what they make? a 500k house mortgage at 4% gets you payment at around 4600 a month for 30 years. someone that makes 100k a year can easily afford that payment and have several thousand left to make car payments or credit card bills. same thing for college loans or a boat another house etc. in my first example a forex trader can leverage 50:1 on his account to trade. i didnt talk about unfunded liabilities because there are no such things as unfunded liabilities just like there are no such things as funded liabilities. those are just phrases coined as part political maneuver. also it isnt substantially related to the topic. i agree with the last part but my point is that we're not at the point of borrowing too much even though market conditions make it seem like so.
You're still pretending that economics is a predictable science, and ignoring the fact that printing money is immoral and dangerous.
do you think a trend is your friend? because i do. and i typed that response to vitamin trying to explain that what you refer to as printing money is actually a natural reflection of the value of an economy
Lol, are you saying that it will always go up because it has for the past 50 years? I see graphs displaying the short-term benefits of government spending. You do know what GDP is, right? How is counterfeitting natural?
nope in the short term both gdp and equity markets can lose. i have never heard of someone calling 50 years "short term" you say the gdp growth is because of government spending, but you ignore the continuous bull run in private corporations and the prosperity for their shareholders. and if you reread that post you should conclude that it isnt counterfeitting otherwise there would be no money and no economy.
Yep, when regular citizens do it it's called counterfeiting. When the united States does it, its called the Federal Reserve....I'm sorry, I'm sorry I just thought that was funny...carry on
no lmao obviously you did not read. when the treasury issues debt those bills/notes/bonds are auctioned on the open market. or you can purchase them from sellers in the bond market.
You're actually off by an entire order of magnitude when you include unfunded liabilities (or simply liabilities if you don't like the term "unfunded"), like any normal household/company/corporation would have to. There are such things as promises to pay for things, like pensions for life, Medicare, Medicaid, Social Security, etc. They're usually called liabilities. These programs are going to balloon as more and more people take advantage of them and it is very much related to the topic of government debt. Why do you think the debt increases so much every year?
What are your thoughts on our Fiat Money? I would argue we are just promoting the boom/bust business cycle and creating another bubble that will burst. Probably the worst of them all to date, since 1913. The American Empire is Another Bubble - Don A. Rich - Mises Daily Quantitative Easing: It's Sinking the Fed's Status - Robert P. Murphy - Mises Daily The End of Bernanke's "End Game" - William L. Anderson - Mises Daily I would argue that Social Security is an unfunded liability because there is no money for the people that paid into it as it has already been spent elsewhere - would ponzi scheme be more accurate? I would also argue that so is Medicare and any other social welfare program the government thought up. $2.5 trillion in Social Security bonds stored in filing cabinet in downtown Parkersburg, W.Va. | The Columbus Dispatch Social Security deficits now 'permanent' - Washington Times