Friday, October 25, 2013

Debt Itself Isn't an Evil

I think a lot of the austerity push is done by people who see debt and deficits as evils in and of themselves, so wile it's nice to see papers that point out how bad austerity is, I doubt they will be considered compelling to the people who push for austerity.

My confusion is really with the bizarre notion of debt as bad being held so broadly by people in finance who pretty much require debt to survive (where do you think bank profits [traditionally] come from?).  So many of these people actually believe in debt as a beneficial force in economies...just not from governments.  But that is the worst part of it.  If you had $1M and you wanted to loan that to someone to be paid back with interest you have a lot of options: banks, businesses, individuals, and governments.  Only one of those has a near zero probability of collapse: any of the first 3 could declare bankruptcy and you'd be out some or all of your investment.  The government...not so much, and frankly, if it does (particularly if it is your own/the US) then you probably have more to worry about than loss of your money, like reavers.  (Yes, a Firefly reference.)




No comments: