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

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

Regards
DL

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.

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.

Regards
DL

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.

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.

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.

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.

Regards
DL

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).

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.

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.

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.

Regards
DL

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.

Regards
DL

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.

Regards
DL

I completely agree.

Eventually conscience will trump money.

Good luck with that.

Regards
DL

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.

Regards
DL

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

My kingdom for a lawyer who will put such a case before the Hague.

That is what it would take to change perception and even if won, most countries would ignore the ruling.

Faith is to believe without evidence. I have faith that what I just put is a truth.

Regards
DL