Buzz Sociopolitics Malaysia: Debt Is (Mostly) Money We Owe to Ourselves

Debt Is (Mostly) Money We Owe to Ourselves

December 29, 2011

www.nytimes.com

Debt Is (Mostly) Money We Owe to Ourselves

by Paul Krugman, The Conscience of the Liberal (12-28-11)

I wish to enhance the bit upon something Dean Baker said yesterday:

As the country you cannot levy huge debt burdens upon the children. It is impossible, during least if you have been referring to supervision debt. The reason is simple: during the single point you will all be dead. That equates to that the ownership of the debt will be passed upon to the children. If you have the little huge thousand trillion dollar debt that is due to the children, then how have you imposed the weight upon them? There is the distributional emanate Bill Gates' young kids might own all the debt though that is within generations, not between generations. As the group, the children's well-being will be dynamic by the capability of the manage to buy (which Brooks complained about earlier), the state of the physical as well as social infrastructure as well as the environment.

One can make the point that many of the debt is owned by foreigners, though this is the outcome of the traffic deficit, that is in spin caused by the over-valued dollar.

I consider it's worth seeking during the little numbers here.

Below have been dual series, both expressed as percentages of GDP: total made at home non-financial debt (public plus private), as well as U.S. net unfamiliar debt, as totalled by the disastrous of the net international investment p! osition:

What you can see here is that there has been the large climb in debt, with the many not as big pierce into net debtor status for America as the whole; for the many part, the additional debt is income you owe to ourselves.

And here have been the same numbers, totalled as changes from 1980, so that you can see that the great bulk of the climb in debt was not financed by unfamiliar borrowing.

People consider of debt's purpose in the manage to buy as if it were the same as what debt equates to for an individual: there's the lot of income you have to compensate to someone else. But that's all wrong; the debt you emanate is basically income you owe to ourselves, as well as the weight it imposes does not involve the genuine send of resources.

That's not to say that high debt can't cause problems it positively can. But these have been problems of distribution as well as incentives, not the weight of debt as is ordinarily understood. And as Dean says, talking about withdrawal the weight to the young kids is generally nonsensical; what you have been withdrawal behind is promises that the little of the young kids will compensate income to alternative children, that is the very opposite kettle of fish.