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Author Topic:   The Changing World Order
Percy
Member
Posts: 22572
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.5


(1)
Message 279 of 302 (910922)
05-26-2023 8:07 AM
Reply to: Message 278 by Phat
05-26-2023 4:10 AM


Re: Dalio short comment on national debt
From the Forum Guidelines:
  1. Bare links with no supporting discussion should be avoided. Make the argument in your own words and use links as supporting references.
In your own words, describe Dalio's points, then contribute your discussion of them or advance your arguments about them. I think most of the people here have said they will not be watching your videos.
--Percy

This message is a reply to:
 Message 278 by Phat, posted 05-26-2023 4:10 AM Phat has not replied

  
Percy
Member
Posts: 22572
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.5


Message 286 of 302 (910933)
05-26-2023 2:04 PM
Reply to: Message 282 by Phat
05-26-2023 1:01 PM


Re: Dalio short comment on national debt
Phat writes:
Don't play dumb. It means owing more year after year. Money that never gets paid back.
With almost no exceptions, no country ever pays off its national debt. Reducing debt as a percentage of GDP reduces interest costs but increases opportunity costs. It's a tradeoff.
Here's an example in everyday terms. Few people who refuse to incur any debt can purchase a house. Having no debt is good in the sense that no money is paid for interest, but it costs you the opportunity to live in a house, and the opportunity to make money in the form of increasing value of the house which is leveraged because you don't fully own the house whose appreciation in value is benefiting you.
It's the same for a country. Having no debt might seem like a good idea, but nations that put too great an emphasis on debt reduction do not take advantage of certain opportunities, like investing in infrastructure, technology, education and health.
That being said, it's difficult to deny that the national debt of the United States is too high. As a percentage of GDP the US has one of the highest national debts in the world. First world countries that are even worse are Japan, Greece, Venezuela and Italy, not the best company. On the other hand, other first world countries not far behind are Portugal, Spain, France, Canada, Belgium and the United Kingdom. We are not alone in having a high national debt, and that so many countries are doing just fine with a high national debt means that it is not the sign of impending disaster that you keep portraying it as.
There is more than one way to look at the national debt, for example by interest payments. This year the interest on the national debt will be around 2.4% of GDP, which isn't bad. But it is expected to rise to 7.2% by 2053, which seems pretty bad.
Strong and valid arguments can be made that we should be reducing our national debt. Stick to that and toss out the precious metal, gold-standard and CBDC nuttiness.
--Percy

This message is a reply to:
 Message 282 by Phat, posted 05-26-2023 1:01 PM Phat has seen this message but not replied

  
Percy
Member
Posts: 22572
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.5


Message 287 of 302 (910934)
05-26-2023 2:19 PM
Reply to: Message 284 by Phat
05-26-2023 1:53 PM


Re: Dalio short comment on national debt
Phat writes:
Tanyptery]So I was correct, something else you do not understand. It's an authorization to PAY for goods and services already bought on credit by our government. This is authorizing paying it back, Dumbass!
OK, fair enough. So WHO does the government authorize to pay it back?
Tanypteryx didn't mean it that way. It's like the revolving credit on your credit card. Every month you pay off old debt and incur new debt. And of course it is the government paying back any debt it incurs.
Typically governments issue bonds to raise money. For example, the US issues bonds with terms of 2, 3, 5, 7 and 10 years. When the treasury issues a $1000 10-year bond at an annual interest rate of 3.83%, that means you give them $1000 today, and then for the next ten years they give you $38.30 every year until maturity, at which time they give you your $1000 back. (In reality you would rarely deal directory with the treasury - you'd use a broker who deals in the bond trading market.)
And why does it never seem to get paid back? After all, the amount grows each year.
Again, bits of it are being borrowed and paid back all the time. It grows when more is borrowed than paid back, and it shrinks when more is paid back than borrowed.
--Percy

This message is a reply to:
 Message 284 by Phat, posted 05-26-2023 1:53 PM Phat has replied

Replies to this message:
 Message 290 by Phat, posted 05-27-2023 3:18 PM Percy has replied

  
Percy
Member
Posts: 22572
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.5


Message 289 of 302 (910939)
05-27-2023 5:16 AM
Reply to: Message 288 by dwise1
05-26-2023 2:41 PM


Re: Dalio short comment on national debt
dwise1 writes:
Don't confuse personal finances with business finances. As a person, the less debt we carry the better (eg, my condo and car are paid off, so all I owe is whatever I paid for this month with my credit cards, which I pay off completely every month). But debt can be a valuable tool for a business.
And also personally. Without personal debt fewer people would own houses or cars, or they'd own crappier houses or cars, or do without that addition or repair. And they'd taker fewer or more modest vacations. Paying off debt is also a great motivator.
And for that matter, you would want to vote in Democrats who are the fiscally responsible ones. All Republicans can do is spend like drunken sailors running up huge deficits and adding enormously to the debt while eliminating revenue streams (eg, massive tax cuts for the wealthiest).
They also cut the IRS budget to the bone to hobble their ability to collect taxes.
--Percy

This message is a reply to:
 Message 288 by dwise1, posted 05-26-2023 2:41 PM dwise1 has not replied

  
Percy
Member
Posts: 22572
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.5


Message 295 of 302 (910957)
05-28-2023 4:12 PM
Reply to: Message 290 by Phat
05-27-2023 3:18 PM


Re: Dalio short comment on national debt
Phat writes:
Bottom Line: Is an ever increasing debt good for America? How about for the world?
I addressed this in Message 286. If you get a chance give it another read and see if that answers your question.
Nearly all countries have a national debt. That's not going to change. But if a country's national debt grows too large then it can be ruinous and cause runaway inflation. Germany's war reparations debt after WWI is the classic example.
Countries never really reduce their national debt in any significant way if you're measuring it terms of a currency, say the dollar. The practical approach to reducing the national debt is to measure it as a percentage of GDP. In that way a country can grow its way out of debt.
--Percy

This message is a reply to:
 Message 290 by Phat, posted 05-27-2023 3:18 PM Phat has seen this message but not replied

  
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