- Joined
- 26 March 2014
- Posts
- 19,670
- Reactions
- 11,976
So that's the accounting done, it doesn't say anything about the effect of debt on the economy, governments or individuals.
The state of the economy at the street level
- Thread starter Tyler Durden
- Start date
So that's the accounting done, it doesn't say anything about the effect of debt on the economy, governments or individuals.
PZ99
( ͡° ͜ʖ ͡°)
- Joined
- 13 May 2015
- Posts
- 3,303
- Reactions
- 2,403
The laws of physics in this context state that if there was no net debt there would be no circulation of money. So it doesn't remotely solve the debt issues faced by the state.
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
if you have something to say about it, just say it.
PZ99
( ͡° ͜ʖ ͡°)
- Joined
- 13 May 2015
- Posts
- 3,303
- Reactions
- 2,403
You're saying the total sum of liability is equal to the total sum of assets, yes ?
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
No, I am not saying that at all.
There could be $100 Trillion of assets on earth, and $1 of debt. Total debt on earth doesn’t have to equal total assets.
All I am saying is that for every $1 of debt that some body owes, another person, group or entity owns that debt and it will appear on their balance sheet as an asset, so the “net worth” of our planet remains The same.
Eg, growing debt, does not mean the economy as a whole is poorer, it can actually make society richer if it is being used to fund productive assets.
PZ99
( ͡° ͜ʖ ͡°)
- Joined
- 13 May 2015
- Posts
- 3,303
- Reactions
- 2,403
I don't seem to remember anyone saying the economy as a whole is poorer ?
If the net worth of the planet is nothing how does that relate to the original point of slowing growth and increasing difficulty with meeting debt obligations ?
If the net worth of the planet is nothing how does that relate to the original point of slowing growth and increasing difficulty with meeting debt obligations ?
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
That is the general assumption when people talk about debts rising, they seem to be assuming that we a some how poorer.
what?? Who said the net worth of The planet is zero.
The net worth of the planet is Many Trillions of dollars, regardless of how much debt there is.
Where is the evidence that debt obligations are harder to meet on average now than they were ten years ago?
sure there might be some areas of consumer finance struggling, but interest rates are lower than ever, and company’s are falling over them selves to sign up for debt because it’s so cheap.
PZ99
( ͡° ͜ʖ ͡°)
- Joined
- 13 May 2015
- Posts
- 3,303
- Reactions
- 2,403
Sorry, that was a typo on my part. I'll re-post the question for clarity:
If the net debt of the planet is nothing how does that relate to the original point of slowing growth and increasing difficulty with meeting debt obligations ?
Right here and now. Ten years ago Australia's Govt had no net debt. Now we have a net debt of around 400 billion dollars. Servicing that debt is money out of taxpayers' pockets. For every month of output we produce, we have one month equal to our debt. Obviously it's harder to service debt today than ten years ago when their was no debt.
The post you were responding to when you said "no net debt" was about slowing growth and higher debts for economies - not consumers.
- Joined
- 26 March 2014
- Posts
- 19,670
- Reactions
- 11,976
PZ99 pretty well summed it up at #1249.
The costs of servicing the debt inhibits people from spending on the products of business and therefore debt degrades economic consumption and contributes to falling economic growth.
Of course, some debt can be good if it results in an increase of capabilities like starting a new business, building productive infrastructure etc, but if you have to borrow just to stay alive then you are basically eating yourself and it won't end well.
I think the US has been in this situation for quite a while, and we could mention countries like Greece.
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
If a person pays $1 in interest, that person has $1 less to spend.
however that $1 interest payment is going to land as income in some one else’s pocket, and they will have an additional $1 to spend.
so the net affect is $0, not bad not good it just is.
however as you stated some debt is extremely good.
for example I have financed about 36 solar installations through rate setter.
I earn interest.
The borrower gets cheaper energy.
The installation creates employment
the debt creates a net plus for the economy in situations like this, in consumer situations.
Value Collector
Have courage, and be kind.
- Joined
- 13 January 2014
- Posts
- 12,016
- Reactions
- 8,291
that’s just like saying “John used to be debt free, but then he got a car loan, so now debt is harder to service because he has a monthly payment, when in the last he didn’t”
obviously the debt of any single borrower (including the government) will be harder to service if that borrower increases their level of debt relative to what They had in the past.
the fact is debt $1 Billion of debt is far easier to service today than it was 10 years ago, the fact you have debt now and 10 years ago you didn’t is irrelevant, That’s just a personal choice.
—————-
my point is within the global economy the net affect of debt is $0.
every dollar of interest paid by one person, group or entity is earned by another, its not lost, it is just shifted from one household, suburb, state or country to another household, suburb, state or country.
- Joined
- 8 June 2008
- Posts
- 12,441
- Reactions
- 18,102
@SirRumpole, we both agree on
"Of course, some debt can be good if it results in an increase of capabilities like starting a new business, building productive infrastructure etc"
So i do not understand your stance on increasing budget deficit by giving away unproductive money bought on debt, sure the lower incomes will buy more fast food and Chinese made electronics at JBHifi
But overall, Australia looses,
We spend a billion plus per month just serving our debt interest, can you imagine the hospitals and productive assets we could build and serve with that.As per my usual rant, i saw a country sinking a generation ago following mistakes after mistakes in term of immigration, welfare and socialist ideology, it is very painful to see it replicated step by step here with sadly the same outcomes..surprise surprise..
"Of course, some debt can be good if it results in an increase of capabilities like starting a new business, building productive infrastructure etc"
So i do not understand your stance on increasing budget deficit by giving away unproductive money bought on debt, sure the lower incomes will buy more fast food and Chinese made electronics at JBHifi
But overall, Australia looses,
We spend a billion plus per month just serving our debt interest, can you imagine the hospitals and productive assets we could build and serve with that.As per my usual rant, i saw a country sinking a generation ago following mistakes after mistakes in term of immigration, welfare and socialist ideology, it is very painful to see it replicated step by step here with sadly the same outcomes..surprise surprise..
- Joined
- 26 March 2014
- Posts
- 19,670
- Reactions
- 11,976
The problem as I see it is that the LNP never considers additional sources of revenue it could gain from our mineral and gas resources which basically are being plundered by foreign conglomerates and avoiding tax in the process.
Norway put a 40% tax on their gas exports and the companies are still in business.
It's time we did similar.
PZ99
( ͡° ͜ʖ ͡°)
- Joined
- 13 May 2015
- Posts
- 3,303
- Reactions
- 2,403
LOL > I don't think Australia going into horrendous debt was a personal choice.
Having more debt now than ten years ago is very relevant. You and I have to pay for it.
That money doesn't just go in some one else’s pocket - it goes out of the country, which creates a negative effect here.
Using the "zero net debt" theory isn't a magic bullet because it avoids the point of the debate.
- Joined
- 8 June 2008
- Posts
- 12,441
- Reactions
- 18,102
Being reasonable, we can agree that both labour post Howard years and LNP are doing a pathetic work debt wise
The trouble is that Australia is plunging into a socialist welfare state even with LNP on power, we still have pensions and ndis unchanged moving from labour to LNP , ndis, the symbol of an unaffordable system in my opinion is a bipartisan vote
You can not win here without being pro welfare.either lower income welfare or middle class/retiree welfare....
And LNP did not kill the mining tax, Gilliard did with union and mining lobby..that is history...
But agree LNP would have killed it too...
- Joined
- 14 February 2005
- Posts
- 15,103
- Reactions
- 16,899
An issue there is who gets that money?
That is, the possibility that the money is in practice being transferred from someone who would spend it in the real local economy to someone who won't do so.
- Joined
- 26 March 2014
- Posts
- 19,670
- Reactions
- 11,976
Would you agree franking credit rebates are welfare ?
- Joined
- 8 June 2008
- Posts
- 12,441
- Reactions
- 18,102
No, as a owner of a company with your share or as a 50pc owner of the corner shop, you should not pay taxes twice.
Tax are evil and should be kept a minimum, the fight should always be to reduce output, not increase input..as gov are by nature inefficient..as are big corporate by the way, but they replace efficiency by bullying
- Joined
- 26 March 2014
- Posts
- 19,670
- Reactions
- 11,976
So what sort of middle class welfare are you talking about ?
Similar threads
