Is our debt what we want to leave to our children as their i

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Re: Is our debt what we want to leave to our children as the

Postby James S Saint » Thu Jun 29, 2017 6:53 pm

Carleas wrote:James, caricature is a weak form of argument, and even if it succeeds rhetorically, it does not help to discover truth.

Not nearly as much as the fear of accepting the truth.
Clarify, Verify, Instill, and Reinforce the Perception of Hopes and Threats unto Anentropic Harmony :)
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Re: Is our debt what we want to leave to our children as the

Postby Carleas » Thu Jun 29, 2017 7:19 pm

Each generation has a choice:
1. They can avoid passing debt on to the next generation, but that will mean having less cash to invest.
2. They can pass debt to the next generation, and invest the cash.

If the interest on the debt is less than the expected return on the investment, choosing option 1 will mean choosing to give the next generation less. True?
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Jun 29, 2017 7:53 pm

Carleas wrote:
Greatest I am wrote:If you can see something good in leaving a debt, in terms of a dying ecosystem to your children then good for you.

You would agree that leaving more value to your descendants is better, right? My point is that there are situations where the way to maximize the value you will leave to your children is to also leave them debt. If that's so, if there are cases where you must take on debt and leave that debt to your children in order to do the right thing by your children, then debt can't be inherently bad.

Sure, if we aren't getting anything for it then debt is bad, but that's an implausible scenario. Most debt is produced in exchange for valuable goods or services. Most houses aren't on quicksand.


I understand what you are saying.

It does not apply to the hardship we are passing up to our children.

The house with a mortgage you are giving your children has so much damage that needs repair that they will have the debt you give them plus they will have to get another mortgage for the repairs to bring it to a livable or marketable condition. That places the house out of the market and they will have just a debt without a house when they sell it.

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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Jun 29, 2017 8:00 pm

Urwrongx1000 wrote:If you owe 200k on a 1mil house mortgage then you don't own the house, the bank does.


They have control of the sale, but if they sell it, you get 800k and they get 200k, so it can be said that the bank only owns 1/5 while the other party owns 4/5. Right?

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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Jun 29, 2017 8:02 pm

Carleas wrote:James, caricature is a weak form of argument, and even if it succeeds rhetorically, it does not help to discover truth.

Urwrongx1000 wrote:If you owe 200k on a 1mil house mortgage then you don't own the house, the bank does.

That depends on the state, but even where the bank is held to own it, they can only force a sale for market price and have to give you what's left over after they take what they're owed. In any jurisdiction, you're $800k in the black.


Oops. I said the same basic thing above before seeing your reply.

Great minds etc.

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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Jun 29, 2017 8:04 pm

James S Saint

We usually disagree but I think you see what I meant here with Carleas.

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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Jun 29, 2017 8:07 pm

Carleas wrote:Each generation has a choice:
1. They can avoid passing debt on to the next generation, but that will mean having less cash to invest.
2. They can pass debt to the next generation, and invest the cash.

If the interest on the debt is less than the expected return on the investment, choosing option 1 will mean choosing to give the next generation less. True?


This makes no sense at all but I will see how you respond to what I gave you above.

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Re: Is our debt what we want to leave to our children as the

Postby Carleas » Thu Jun 29, 2017 10:16 pm

I don't mean to say that it's not possible to rack up debt with nothing to show for it, but rather that debt itself is not evidence that that's what's happened, and it's not the debt that makes those cases bad.

If I have $100k, and someone offers to sell me magic beans for $100k, it doesn't matter whether I buy those beans outright or whether I take out a $100k loan to buy those beans: buying the beans is a stupid use of $100k.

The US national debt has been generated for a lot reasons, some better than others. But if we wanted the government to do everything it does without generating debt, that would mean much higher taxes, which would reduce output. On the other hand, we can point to programs that should be cut, but the argument for cutting them isn't that we shouldn't be borrowing to pay for them, it's that we shouldn't be paying for them at all, they're magic beans and they're a foolish use of money, borrowed or otherwise.

But there are other things the government spends money on that are good investments, and a good investment is worth borrowing for if we can borrow cheaply (which we can). What's the ROI on infrastructure, a legal system, a powerful military, government-funded research, etc? For many of those things, return is positive, so we should borrow when it costs us less than that expected ROI.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Fri Jun 30, 2017 3:12 pm

Carleas

The bottom line.

Be it government, business or a household, to borrow when you do not have to is not the way to go even if borrowing is cheap.

In terms of the O.P., if I have a farm and will it to my child when only 1o% of the fields are workable, and it would bankrupt the child to bring the rest to usefulness or if he has to pay tax on the 90% that exceeds the return from the 10%, then I am leaving a debt that will negate any gain.

That is what we are doing to our ecology. Shame on us.

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Re: Is our debt what we want to leave to our children as the

Postby Carleas » Fri Jun 30, 2017 3:31 pm

Greatest I am wrote:Be it government, business or a household, to borrow when you do not have to is not the way to go even if borrowing is cheap.

But why? If I can borrow and pay interest at 2%, and I can invest the money and expect a return of 7%, then borrowing will produce a net return, and I should borrow just about as much as I can, until my credit runs out or the return on the marginal dollar falls.

Greatest I am wrote:if I have a farm and will it to my child when only 1o% of the fields are workable, and it would bankrupt the child to bring the rest to usefulness or if he has to pay tax on the 90% that exceeds the return from the 10%, then I am leaving a debt that will negate any gain.

All this shows is that it's possible to come up with situations where bad investments and debt combine to produce a bad outcome. Again, I don't deny that. But you seem to deny that debt and good investment will produce a good outcome.

Greatest I am wrote:That is what we are doing to our ecology.

Extending debt as a metaphor to the environment is not the clearest way to think about environmental degradation. Destruction of the environment is the depletion of a finite resource. It can't be paid back, it regenerates slowly and if we "use" it at a rate faster than it can regenerate it will just collapse. That's not how a loan works.

Moreover, since loans are actually useful and value-generating, comparing environmental degradation to debt tends to encourage reckless use: if it's a loan, we can borrow now and pay it back when the loan comes due.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Fri Jun 30, 2017 3:49 pm

Carleas wrote:
Greatest I am wrote:Be it government, business or a household, to borrow when you do not have to is not the way to go even if borrowing is cheap.

But why? If I can borrow and pay interest at 2%, and I can invest the money and expect a return of 7%, then borrowing will produce a net return, and I should borrow just about as much as I can, until my credit runs out or the return on the marginal dollar falls.
.


You show why you should not borrow in your own grammar. --- "and expect a return of 7%,"

The investment you expect to pay off is an expectation/gamble, and not a certainty.

We expect that our children will be able to clean up the corrupted environment we are leaving them.

We are not certain how many will die needlessly before or even if they can clean it up.

We, as you suggest we should in y9our analogy, should not gamble away their lives.

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Re: Is our debt what we want to leave to our children as the

Postby Carleas » Fri Jun 30, 2017 4:10 pm

Greatest I am wrote:The investment you expect to pay off is an expectation/gamble, and not a certainty.

Right: we should expect borrowing to produce a better outcome than not borrowing. Given that we can't know the future, we have to go on what we expect. And going on what we expect means borrowing.

Because when we don't borrow, we are still taking a different set of risks. Suppose we don't invest, and keep the money in cash, and the value of the dollar plummets. Or suppose we decide not to borrow to buy a house, and rental prices go way up. Or suppose our expected return would have been enough to pay for an unexpected surgery, and by not borrowing to invest we are left with too little and so we die.

Obviously, if everything goes wrong with a borrow-to-invest scheme, the downside can be significant. And there are plenty of bad and risky investments that it's not wise to invest in (e.g. magic beans, or Enron). But there are ways to hedge and pick less risky bets. And if you're borrowing at 2%, the odds of a break-even-or-better outcome on a reasonably safe investment are high (the government currently borrows at ~2% or less).
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Re: Is our debt what we want to leave to our children as the

Postby Urwrongx1000 » Fri Jun 30, 2017 6:59 pm

Borrowing to invest is gambling.

Concerning the u.s. debt, taking out loans at 5% interest to invest in a 7% return, still can lose billions of dollars. Because investments don't guarantee returns. But credit is always guaranteed, with the exception of forgiveness.

How often do banks forgive loans? Usually death is required.
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Re: Is our debt what we want to leave to our children as the

Postby Carleas » Fri Jun 30, 2017 7:21 pm

Urwrongx1000 wrote:Borrowing to invest is gambling.

This too is a misleading metaphor. When you hear "gambling", you think of casinos and craps and roulette. But in those games, expected returns are negative: over many iterations you should expect to lose money. They're a bad bet.

Investing has a positive expected return. It's "gambling" in the sense that the outcome in uncertain and there's a chance you could lose money, but over many iterations you should expect to gain money. They're a good bet.

Investing is gambling in the same sense that everything is gambling: anything you buy can be destroyed in a freak accident; any training you get could become obsolete or the market could become saturated or robots could become a viable replacement; any city that you move to could see a slump or a catastrophe; etc. Anything valuable you buy or build can change value. There's risks in all choices, and you try to make choices with positive expected outcomes. Often, the most positive expected outcome involves investing, and often it involves borrowing to invest.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Fri Jun 30, 2017 8:09 pm

Carleas wrote:
Greatest I am wrote:The investment you expect to pay off is an expectation/gamble, and not a certainty.

Right: we should expect borrowing to produce a better outcome than not borrowing. Given that we can't know the future, we have to go on what we expect. And going on what we expect means borrowing.

Because when we don't borrow, we are still taking a different set of risks. Suppose we don't invest, and keep the money in cash, and the value of the dollar plummets. Or suppose we decide not to borrow to buy a house, and rental prices go way up. Or suppose our expected return would have been enough to pay for an unexpected surgery, and by not borrowing to invest we are left with too little and so we die.

Obviously, if everything goes wrong with a borrow-to-invest scheme, the downside can be significant. And there are plenty of bad and risky investments that it's not wise to invest in (e.g. magic beans, or Enron). But there are ways to hedge and pick less risky bets. And if you're borrowing at 2%, the odds of a break-even-or-better outcome on a reasonably safe investment are high (the government currently borrows at ~2% or less).


I agree with the math, but again, there are no guarantees that you will come out ahead and what you want to pass up to your children could be a lot less than what you planed for. Gamble with that all you like but do not gamble with the environment.

Your monetary plan is not really what I wish to discuss. I am here to complain about our self-centeredness and greed that is having us destroy where are children and grandchildren will try to live and breathe.

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Re: Is our debt what we want to leave to our children as the

Postby Urwrongx1000 » Fri Jun 30, 2017 8:15 pm

The best bet is no bet, not betting on the next generation.

If an individual works hard over a lifetime, saves $1 mil to leave to his few children, then that means a lot compared to the average person who leaves nothing, or a massive debt instead.

Unfortunately, the short-sightedness that DL is referring, the future generations stand to lose and immerse deeper and deeper into debt that is never planned to be repaid. That's how slave-nations are formed. The opposite of western "freedom" and liberalism.


If liberals were true to their platform and premise, then they would be most morally opposed to debt and passing off negatives to future generations, than anybody else.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Fri Jun 30, 2017 8:24 pm

Urwrongx1000 wrote:The best bet is no bet, not betting on the next generation.

If an individual works hard over a lifetime, saves $1 mil to leave to his few children, then that means a lot compared to the average person who leaves nothing, or a massive debt instead.

Unfortunately, the short-sightedness that DL is referring, the future generations stand to lose and immerse deeper and deeper into debt that is never planned to be repaid. That's how slave-nations are formed. The opposite of western "freedom" and liberalism.


If liberals were true to their platform and premise, then they would be most morally opposed to debt and passing off negatives to future generations, than anybody else.


I am a liberal and see conservatives as being the fly in the ointment.

I.E. The U.S. liberals wanted a single payer medical system but the conservatives would rather pass on a flawed and corrupted system.

The same applies to the environment where at present, Trump denies climate change as a problem while the liberals see it as real.

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Re: Is our debt what we want to leave to our children as the

Postby Urwrongx1000 » Fri Jun 30, 2017 9:29 pm

Another form of debt or inheritance:

Does the present and past generations leave behind positive ideals, for future generations, or negative ideals? Does society allow tomorrow's children and grandchildren to chase empty dreams and mindless pleasures? To be perpetually hooked on drugs, getting high, and shooting up heroine? Is this what the future generations ought to aspire to? If not, then the answer is obvious. Challenges and goals must be set, for future generations, to become something 'better' and 'superior'. Excellence must be taught, and applied.

In this way, again, are the current or recent generations living up to the test? Are today's generations being left with something positive, an inheritance, or something negative, a debt??
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Fri Jun 30, 2017 10:05 pm

Urwrongx1000 wrote:Another form of debt or inheritance:

Does the present and past generations leave behind positive ideals, for future generations, or negative ideals? Does society allow tomorrow's children and grandchildren to chase empty dreams and mindless pleasures? To be perpetually hooked on drugs, getting high, and shooting up heroine? Is this what the future generations ought to aspire to? If not, then the answer is obvious. Challenges and goals must be set, for future generations, to become something 'better' and 'superior'. Excellence must be taught, and applied.

In this way, again, are the current or recent generations living up to the test? Are today's generations being left with something positive, an inheritance, or something negative, a debt??


To this Canadian, the answer to your question can be summed up in one word.

Trump.

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Re: Is our debt what we want to leave to our children as the

Postby Sanguinus » Mon Jul 03, 2017 12:22 am

Carleas wrote:Let me put it another way, to more directly address what seems to be the claim of this thread: inherited debt is not prima facie evidence of a wrong to subsequent generations. In many cases the best way to generate value is to take on debt, so the existence of debt can also be evidence of value creation. Indeed, the absence of debt will often be a sign of bad management and under-performance.

The suggestion in this thread is that e.g. the existence of the national debt is evidence that one generation is leaving less to subsequent generations than it might have. But that ignores the fact that debt is generated in exchange for something else, and that something else will often be worth more and generate more value than the debt generates in liabilities.

I completely agree.
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Re: Is our debt what we want to leave to our children as the

Postby pilgrim-seeker_tom » Mon Jul 03, 2017 5:27 am

Eventually conscience will trump money.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Mon Jul 03, 2017 1:13 pm

pilgrim-seeker_tom wrote:Eventually conscience will trump money.


Good luck with that.

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Re: Is our debt what we want to leave to our children as the

Postby mmhgloba » Tue Aug 08, 2017 5:34 am

If you factor in currency depreciation our debt is actually much more then the denomination number...for example in the last 50 years the USD has depreciated 90% against the Swiss frank. Relatively speaking it is necessary to take the headline number and multiply many times over.
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Re: Is our debt what we want to leave to our children as the

Postby Greatest I am » Thu Aug 17, 2017 10:06 pm

mmhgloba wrote:If you factor in currency depreciation our debt is actually much more then the denomination number...for example in the last 50 years the USD has depreciated 90% against the Swiss frank. Relatively speaking it is necessary to take the headline number and multiply many times over.


I cannot argue against this.

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Re: Is our debt what we want to leave to our children as the

Postby Arminius » Fri Aug 18, 2017 1:06 am

Is our debt what we want to leave to our children as their inheritance?

Intergenerational injustice is crime. So "our" debts are crime. At least they are based on criminal activity.
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