Arguably, America has been dealing with the hangover of massive debt since the 1960s. After the world wars there was a tremendous economic boom, then they had to deal with the fallout in the late 70s, throughout the 80s, and the early 90s. In the late 90s until today they've been hitting the "add debt" button the whole time in government, in companies, and amongst the public, which occasionally blows up bubbles people get rich from, but it's increasing the divide between the rich and the poor, it's destroying the middle class, and it's pricing assets such as homes that people need to thrive outside of the reach of common people.
Anabolic steroids help you grow muscle but your heart and other fundamental structures can be under additional strain with the unnatural growth so lots of people who take steroids die of heart failure or damage other parts of their bodies that aren't improved by steroids. Similarly, debt makes your economy grow fast but in the process you are damaging fundamental economic structures that aren't improved by debt and some of those structures will be strained by the growth of economic activity that wouldn't have otherwise been there and isn't really organic growth.
Anabolic steroids help you grow muscle but your heart and other fundamental structures can be under additional strain with the unnatural growth so lots of people who take steroids die of heart failure or damage other parts of their bodies that aren't improved by steroids. Similarly, debt makes your economy grow fast but in the process you are damaging fundamental economic structures that aren't improved by debt and some of those structures will be strained by the growth of economic activity that wouldn't have otherwise been there and isn't really organic growth.
Sort of a childish way of looking at things, there's no free lunch.
Government debt is someone else's asset. So is private debt. That doesn't mean the debt is positive. Especially since government debt is today something we never intend to pay back, so you give monied classes the chance to make money forever so we don't have to pay for something today.
In accounting, there's something called the rule of 72. Basically, you take 72 and divide it by the interest rate on the debt, and that gives you the number of years it takes for the amount you paid to double. At 4%, that comes out to about 20 years, so every 20 years right now we're paying for the thing we didn't want to pay for today in full, and we aren't even touching the principal of the loan. that might not matter to you, but it'll matter to your kids and your grandkids and your great grandkids who pay for your largesse again and again and again.
https://drbudgets.com/2014/03/01/rule-72-debt/
If central banks print more, that can work, but it's not good. Printing more money causes inflation (maybe not immediately but eventually). The inflation tax is a regressive tax that hurts the people on the bottom the most. The rich own assets that appreciate, but retirees living on a fixed income just need to make sure with less. Many people on the bottom rung of society have a fixed income as well so they need to make do with less. People who are working class rely on wages, and inflation eats away at their wage, so every year they need to get a raise or they're further behind, and the rule of 72 applies to inflation as well, so right now people need to ask for double their wages every 10 years just to keep their heads above water (and they aren't getting it), disregarding my next point.
Inflation is also a problem in that it's poorly measured on purpose. The government doesn't want to pay for their inflation tax so over the past 20 years they've gamed the system to keep inflation lower than it really is. If you used to eat steak, then you couldn't afford steak so you bought chicken, then you couldn't afford chicken so you bought bologna, but then you couldn't afford bologna so you bought organ meats, they'd consider that no change in your cost of living despite the fact that everything went way up, and if you're paying $2000 for an iphone where it used to cost $600, they'll argue the new phone is way better so it's basically a better deal so that's no change in the cost of living, and instead of looking at house prices + interest or actual rent, they just ask people who own homes how much they think they'd have to pay to rent. All these games fudge the numbers so the ones who pay for money printing hurt more. If we measured inflation the same way we did in the 1970s, we're at all time highs right now. All while savings, wages, and fixed incomes shrink.
Private debt also has something that makes it way better than public debt: If a person or a company runs up too much debt, they can go bankrupt. The loan is dismissed, that person can't borrow for 6 years, then they're back to square 1. Governments can't do this. They have to deal with long term pain if they take risks on bad investments, and the only way out is through. This has destroyed empires.
It doesn't actually matter what you do with the money when you manage debt like we do. We never pay it back. The debt becomes a bigger and bigger burden on the government and ultimately the people. They can tax to pay it back which means dollars that could have gone to education, healthcare, infrastructure, instead goes to banks. They can print to pay it back which means the poor and working class get poorer. That's how you end up with increasing wealth inequality as you steal from the poor to give to the rich. Moreover private debt dies with the person, but public debt lingers forever. This is why I call government debt enslaving our children and grandchildren, because they're stuck paying for our "free government" forever even long after we're dead.
Debt can be a positive, just like there are medically legitimate uses of cocaine and anabolic steroids, but it's something we have to be extremely careful of. Addicts will always have excuses why they should get another hit, and some people are willing to give up the future for today despite the high cost. It's dangerous enough that a blanket "do good things and it's good" isn't acceptable. If these things are so good, pay for them honestly rather than enslaving future generations.
Government debt is someone else's asset. So is private debt. That doesn't mean the debt is positive. Especially since government debt is today something we never intend to pay back, so you give monied classes the chance to make money forever so we don't have to pay for something today.
In accounting, there's something called the rule of 72. Basically, you take 72 and divide it by the interest rate on the debt, and that gives you the number of years it takes for the amount you paid to double. At 4%, that comes out to about 20 years, so every 20 years right now we're paying for the thing we didn't want to pay for today in full, and we aren't even touching the principal of the loan. that might not matter to you, but it'll matter to your kids and your grandkids and your great grandkids who pay for your largesse again and again and again.
https://drbudgets.com/2014/03/01/rule-72-debt/
If central banks print more, that can work, but it's not good. Printing more money causes inflation (maybe not immediately but eventually). The inflation tax is a regressive tax that hurts the people on the bottom the most. The rich own assets that appreciate, but retirees living on a fixed income just need to make sure with less. Many people on the bottom rung of society have a fixed income as well so they need to make do with less. People who are working class rely on wages, and inflation eats away at their wage, so every year they need to get a raise or they're further behind, and the rule of 72 applies to inflation as well, so right now people need to ask for double their wages every 10 years just to keep their heads above water (and they aren't getting it), disregarding my next point.
Inflation is also a problem in that it's poorly measured on purpose. The government doesn't want to pay for their inflation tax so over the past 20 years they've gamed the system to keep inflation lower than it really is. If you used to eat steak, then you couldn't afford steak so you bought chicken, then you couldn't afford chicken so you bought bologna, but then you couldn't afford bologna so you bought organ meats, they'd consider that no change in your cost of living despite the fact that everything went way up, and if you're paying $2000 for an iphone where it used to cost $600, they'll argue the new phone is way better so it's basically a better deal so that's no change in the cost of living, and instead of looking at house prices + interest or actual rent, they just ask people who own homes how much they think they'd have to pay to rent. All these games fudge the numbers so the ones who pay for money printing hurt more. If we measured inflation the same way we did in the 1970s, we're at all time highs right now. All while savings, wages, and fixed incomes shrink.
Private debt also has something that makes it way better than public debt: If a person or a company runs up too much debt, they can go bankrupt. The loan is dismissed, that person can't borrow for 6 years, then they're back to square 1. Governments can't do this. They have to deal with long term pain if they take risks on bad investments, and the only way out is through. This has destroyed empires.
It doesn't actually matter what you do with the money when you manage debt like we do. We never pay it back. The debt becomes a bigger and bigger burden on the government and ultimately the people. They can tax to pay it back which means dollars that could have gone to education, healthcare, infrastructure, instead goes to banks. They can print to pay it back which means the poor and working class get poorer. That's how you end up with increasing wealth inequality as you steal from the poor to give to the rich. Moreover private debt dies with the person, but public debt lingers forever. This is why I call government debt enslaving our children and grandchildren, because they're stuck paying for our "free government" forever even long after we're dead.
Debt can be a positive, just like there are medically legitimate uses of cocaine and anabolic steroids, but it's something we have to be extremely careful of. Addicts will always have excuses why they should get another hit, and some people are willing to give up the future for today despite the high cost. It's dangerous enough that a blanket "do good things and it's good" isn't acceptable. If these things are so good, pay for them honestly rather than enslaving future generations.
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