06-09-2019, 04:58 AM
(06-09-2019, 03:09 AM)MVL2 Wrote: Doesn't the US have a $22 trillion debt?
Let's put it this way: if you contract to make a $22K debt to buy a car, then you have just created an asset. (As I do not like to plug extant corporations, I will use a defunct one).
So you go to a Packard dealership after you "Ask the person who owns one" (the male chauvinism inherent in Packard's advertising slogan has obviously since been neutered... I have to have some realism!) and you realize that its small car is worth paying the premium for over imports and the similar cars in size of the Big Three. So you make your contract out to Packard Acceptance Corporation, and instead of a car in its inventory, Packard has a contract with you worth $22K on the books. As Packard collects from you it can make investments in plant and equipment, research and development, etc.
When the federal government creates debts it is also creating assets or stimulating the economy. Government contractors get profitable deals subject to federal corporate income taxes and to personal income taxes of the contractors' employees. What the government expends as debt typically returns as tax receipts, according to the model of John Maynard Keynes that is the conventional view in economics. Food aid? You take your food card and go to the nearby A&P... and money goes from the Treasury into A&P, which makes a small profit on your transaction for lobster and asparagus (Ha! ha!). A&P is happy to have a paying customer instead of a shoplifter.
OK -- debt is not evil so long as it comes with an income stream. Electric utilities typically have huge quantities of corporate debt to fund their expensive infrastructure -- but they also have local monopolies on electric power and predictable revenue streams that allow a reliable dividend to investors. If I have borrowed ten million dollars at 4% and get a 7% return and can borrow twenty million dollars for the same proposition, am I a fool to not borrow the twenty million?
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.