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If this is true, then the solution to all our problems is to lend ourselves even more money, right?
The more we "lend" ourselves, the more interest we "make" off of ourselves, right?
I guess someone forgot to tell the bond vigilantes and people who trade sovereign default swaps.
If this is true, then the solution to all our problems is to lend ourselves even more money, right?
The more we "lend" ourselves, the more interest we "make" off of ourselves, right?
Sounds crazy right? But if we are earning 1 trillion dollars in interest then wouldn't that pay for yearly expected obligations for decades after the SS trust fund goes negative? ...and that won't be for decades..
Sounds pretty crazy, Dan.
That would be all nice and peachy if we didn't have to go borrow money from someone else so that we can pay ourselves interest.
Why don't you quit your job and see how long you can sustain yourself by loaning yourself money?
It's absurd. If it were possible to make money by loaning it to yourself, none of us would be working.
I hoped understating my objection would lead to a fuller explanation of how the interest we pay to service our debt gets converted into "income". Dan was either acting like he'd discovered the Philosopher's Stone, or he just thinks we're pathetic idiots. I actually hope it was the latter.
We don't own 6 trillion dollars but if we did we could live very comfortably just off the interest...that's 300-400 thousand dollars in interest, a majority of the interest paid on the debt, minus net interest...
Like I said, I encourage you to quit your job and try this concept out for yourself. Quit your job, loan yourself all your money, spend it, agree to pay yourself back at whatever interest rate provides you the income to meet your desired standard of living and get back to us as to how long that concept works for you.
To be fair, that plan worked wonderfully for bank executives
Ouch.
It worked wonderfully until it didn't.To be fair, that plan worked wonderfully for bank executives
How many bank execs have had to give up all those bonuses they granted themselves for running our economy into the ground?
I'm still torn between two outcomes:
1) People running the banks were stupid enough to think they could reduce risk with magical equations
2) People running the banks knew/gamlbed that the government wouldn't let every bank fail, and so pocketed as much cash as they could milking stupid customers
The goal is to eventually pay off most of the debt, don't get me wrong, but lets not act like a lot of that interest we are paying toward the national debt isn't just going to ourselves...
Let's not act like our other creditors don't really matter either.
....our whole banking system is founded on debt, collateral, and promises to pay, that's our monetary system, all the credibility of the U.S...
Like I said, the eventual goal is to pay down the debt...
Sure. But that doesn't mean we have to overdo, or that overdoing is risk-free. Hyper-indebtedness compromises the value of the promise to pay at some point.
IDK....there seems to be few bounds to the amount of debt creditors are willing to take on.....the U.S. was in a time of real crisis and creditors were still willing to lend the U.S. money for nothing.......that's akin to filing for bankruptcy and still getting a credit card at 2% interest, below inflation..
This idea that fiscal prudence doesn't apply to the USA is dangerous. In fact, I can hardly conceive an idea more dangerous to our future prosperity. Can't you see the intrinsic link to fiscal deficits and borrow and spend conservatism?
I hardly expected such "deficits don't matter" rhetoric from you....
It' not 'deficit don't matter' rhetoric, as I've said, the idea is to pay down the debt considerably, but for now that debt, whether its used by the govt or private business generates wealth and spending.....the markets are concerned about the debt, but they would be much less concerned if the U.S. had a unemployment rate at about 5%, and a growing economy generating more than $3+ trillion/year in taxes...
It's completely irrelevant. Whatever interest income social security gets from their loans to the treasury is money that the treasury either has to tax away from the people or borrow from someone else. We're not coming out ahead on the transaction.
Exactly, this "gold mine" of interest is being paid for. Who's paying it?
Duh.
It's not like tax money just sits in Washington, even the money that is wasted is still spent, that is generating income and wealth...it's much more likely that big business ships its foreign income to banks in the Caribbean to avoid U.S. taxes, and guess what these foreign banks do with their money? Lend it to the U.S. treasury...
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