The Changing World Order

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5. 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

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

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.) 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

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. They also cut the IRS budget to the bone to hobble their ability to collect taxes.--Percy

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