Comments on: Deficit Spending and Hard Money http://www.llamamoney.com/deficit-spending-and-hard-money/ It's not just money - it's Llama Money Thu, 22 Jul 2010 20:14:50 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Llama Money http://www.llamamoney.com/deficit-spending-and-hard-money/comment-page-1/#comment-4525 Llama Money Wed, 03 Jun 2009 23:52:15 +0000 http://www.llamamoney.com/deficit-spending-and-hard-money/#comment-4525 I think that line of thinking is pretty dangerous. What you say is technically true, but I think it doesn't correlate pretty well here. If we base borrowing on our future ability to earn more, that's a very slippery slow to walk. Think about it this way. I figure I can get raises, start a business, new job etc etc to earn more money, so I borrow up to my eyeballs. McMansion, new Escalade with 24's, Apple everything, new furniture, etc etc etc you get the idea. Before you know it, I have a half million in debt and no reasonable way to pay it back - unless everything goes right in the future. I'll spend the rest of my life slaving away to pay off the debt I racked up. The country's debt is the same way. We're spending like madmen, because the "money" isn't as real as it used to be. Future generations will struggle to pay it off, knowing it's impossible the whole time. I think that line of thinking is pretty dangerous. What you say is technically true, but I think it doesn’t correlate pretty well here. If we base borrowing on our future ability to earn more, that’s a very slippery slow to walk. Think about it this way.

I figure I can get raises, start a business, new job etc etc to earn more money, so I borrow up to my eyeballs. McMansion, new Escalade with 24′s, Apple everything, new furniture, etc etc etc you get the idea. Before you know it, I have a half million in debt and no reasonable way to pay it back – unless everything goes right in the future. I’ll spend the rest of my life slaving away to pay off the debt I racked up.

The country’s debt is the same way. We’re spending like madmen, because the “money” isn’t as real as it used to be. Future generations will struggle to pay it off, knowing it’s impossible the whole time.

]]> By: MLR http://www.llamamoney.com/deficit-spending-and-hard-money/comment-page-1/#comment-4504 MLR Wed, 03 Jun 2009 02:41:23 +0000 http://www.llamamoney.com/deficit-spending-and-hard-money/#comment-4504 When comparing it to your personal finances, don't compare it to credit lines. Think of it this way: Is my earning potential finite? -No, I can create more value and get a raise. -I can work a second job and get a second wage. -I can do work on the side and get infrequent payments. -I can create something of value and sell it. -etc If I told you that your earning potential was finite, would you agree or disagree? It is the same for our economy. Every time we make progress on a technology and start a new s-curve, we create value globally. Every time we pick up another highly-specialized firm, we create value globally. Etc. What do you think? When comparing it to your personal finances, don’t compare it to credit lines. Think of it this way:

Is my earning potential finite?

-No, I can create more value and get a raise.
-I can work a second job and get a second wage.
-I can do work on the side and get infrequent payments.
-I can create something of value and sell it.
-etc

If I told you that your earning potential was finite, would you agree or disagree? It is the same for our economy. Every time we make progress on a technology and start a new s-curve, we create value globally. Every time we pick up another highly-specialized firm, we create value globally. Etc.

What do you think?

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