{"id":1026,"date":"2004-11-21T17:41:00","date_gmt":"2004-11-21T23:41:00","guid":{"rendered":"http:\/\/cheerfulchaotic.crazycrew.org\/?p=1026"},"modified":"2004-11-21T17:41:00","modified_gmt":"2004-11-21T23:41:00","slug":"why-debt-is-bad","status":"publish","type":"post","link":"https:\/\/cheerfulchaotic.crazycrew.org\/?p=1026","title":{"rendered":"Why debt is bad"},"content":{"rendered":"

In response to request<\/a>, posted as a comment to one of my entries.<\/p>\n

The simple answer is that debt’s bad because, much like a credit card, you have to pay it off sooner or later. The cute part of this is that the government can legally mint more bills to pay it back. That causes some serious inflationary concerns, though. Generally, it’s only worth it if you are spending the money on something that will pay off to a greater degree than the interest you have to pay. <\/p>\n

Past that point, I had to do some digging to find information. A major portion of our debt is from loans from other developed countries. And we’re using that debt to finance things like tax cuts, and the war. <\/p>\n

To anthropomorphize, our government got a pay cut, and we’re borrowing from our friends to pay for the bills, and the bullets in a prolonged exercise in vigilante-ism. Our friends all know about the vigilante-ism, and are not at all impressed by it. Most of them are loaning us money because they’re confident we’ll pay them back later. But, just as you won’t keep loaning more and more to a friend who won’t go find a good job, so will the international good will dry up for our debt sooner or later. To do that, we’ll have to roll back the tax cuts, and\/or (probably and) tighten our (government’s) belts. <\/p>\n

People like to think their money is their own, and that any taxation is theft. That’s certainly how anti-taxers, like anarchists, libertarians and republicans like to bill things. Hardcore free market advocates like to talk about the inherent, deadweight efficiency losses due to taxation (I can make some pretty graphs to illustrate the deadweight loss if anyone’s interested). Most of these parties fail to point out what the tax dollars provide. Social security is the single largest category, followed by defense. So, these are retirement plans and the (perhaps sometimes misapplied) forces for our security from outside violence. (next, and marginally below the military, is “welfare”. I’m not sure what all they include under that. Certainly the support for state aid programs, but also the stuff for the diabled? or is that under social security? dunno) health, education, veterans, transportation, so forth and so on. Interest on the national debt in 2003 was about half our military expenditures, 8% of the total budget according to this chart<\/a>, (and, I suspect, going up this year).<\/p>\n

So, I ask you, do you want our nation’s poor and elderly living on our streets? Our borders undefended? Fewer roads? More ignorant citizens? Where should the cutting occur? Alternatively, should we tax more, making everyone just a little worse off, so that we can provide more of these benefits? <\/p>\n

When we lose a source of income funding this picture (say by tax cuts, or, for that matter, when other countries stop extending us loans) all of these will decline. And the more abrupt the loss, the bigger the damage. Getting your national credit card maxed out sucks because you lose a source of “income” you’re used to having, and you have to pay it all off. <\/p>\n

you can also see this in the decline of the exchange rate between the US dollar and other currencies over the past few years. It takes more dollars to get an hour of sweatshop labor for your nikes. Or to get a barrel of crude to run the SUVs. Or for me to get my fancy organic mexican produce. Looking at the exchange rate for the canadian dollar and the US dollar, it doesn’t seem terribly unlikely that before bush is out of office, we United States residents could be the ones where our dollar doesn’t count as a full dollar of theirs. See also the Euro, which, I believe, was originally set to a value equal to the US Dollar, and is now about $1.30. <\/p>\n

This may not have been the clearest of explanations, but it was as much an exploration for my own understanding as an explanation for others’. There are many websites on the topic available to a simple google check. Though I often have difficulty judging the quality of their analyses. That is, after all, why I’m pursuing the master’s degree.<\/p>\n","protected":false},"excerpt":{"rendered":"

In response to request, posted as a comment to one of my entries. The simple answer is that debt’s bad because, much like a credit card, you have to pay it off sooner or later. The cute part of this is that the government can legally mint more bills to pay it back. That causes … Continue reading “Why debt is bad”<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1026","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=\/wp\/v2\/posts\/1026","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1026"}],"version-history":[{"count":0,"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=\/wp\/v2\/posts\/1026\/revisions"}],"wp:attachment":[{"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1026"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1026"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cheerfulchaotic.crazycrew.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1026"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}