Reply to: Addiction to debt

[tomtomagain]

I wish we had known that in 2008 - it would have saved alot of trouble.

It's a self-balancing system. Sometimes it corrects gently, other times a bit more violently.

2008 was great for me . I was threatened by unemployment in December 2008 and concluded that it was not acceptable for other people to be able to make the decision about whether I had an income or not. So I created a product and am now working "for myself". The 2008 crash was the nudge I needed.

[BrilloPad]

My main point ( if there was one ) is that debt is neither good nor bad, and saving is neither good nor bad but both are vital to a functioning economy.

I wish we had known that in 2008 - it would have saved alot of trouble.

[tomtomagain]

I thought he was alluding to the rather ridiculous claim by some economists that government spending (and debt) in the economy is required for savings. It depends, anyway, as you can simply stash money in a piggy bank and that will constitute saving it, as it isn't necessarily a case of parking it in a bank to perform its intermediation function of offering interest on it whilst it lends it out for a higher rate. However, it does make more sense put that way, since it is how banks regard any money you put in them (the more recent development being: theirs for the taking.)

Stashing money away in a piggy bank decreases the supply of available money and should cause a tiny-weeny bit of inflation.

My main point ( if there was one ) is that debt is neither good nor bad, and saving is neither good nor bad but both are vital to a functioning economy.

Today I created some debt out of thin air. I have sold some of my software ( to an Australian company and a German company ). I have provided them with the software and an invoice. But you wouldn't describe that debt as "bad" or an addiction - it's just vital to business.

[Zero Liability]

Tom Tom is correct. Whoever you save with will have a debt to you.

I thought he was alluding to the rather ridiculous claim by some economists that government spending (and debt) in the economy is required for savings. It depends, anyway, as you can simply stash money in a piggy bank and that will constitute saving it, as it isn't necessarily a case of parking it in a bank to perform its intermediation function of offering interest on it whilst it lends it out for a higher rate. However, it does make more sense put that way, since it is how banks regard any money you put in them (the more recent development being: theirs for the taking.)

[Doggy Styles]

How do you figure? You can save without going into debt. Where do you think debt comes from without central bank funny money? Or credit, rather.

Tom Tom is correct. Whoever you save with will have a debt to you.

[BrilloPad]

I wish AtW was here to tell us the right answer.

[Zero Liability]

If you don't have debt then you cannot have "saving".

How do you figure? You can save without going into debt. Where do you think debt comes from without central bank funny money? Or credit, rather.

[darmstadt]

I once got lost in Elephant & Castle and found myself on the Old Kent Road. Thanks to Monopoly, it was oddly reassuring; a vague sense of "Well at least it's somewhere I know" even though I'd never been there before

I once worked at the Elephant & Castle as above the shopping center the DHSS (thats how long ago it was) had a computer center and it was notable for a few things:

- the snooker room was built out the back of the computer room, which was handy
- the breakfasts in the canteen were the bollocks
- our department was nearly all contractors starting with the pig ignorant high earning EDS consultants at the top to the high earning (payment was by cheque in those days) techies at the bottom with a sprinkling of civil servants in between who were all pretty damn good at their jobs
- it was piss easy
- the bookies below our office where afternoons were spent betting on the dogs although you had to be careful sneaking down there as the offices all looked down on the shopping center
- watching the weekly muggings in the shopping center from above

[SpontaneousOrder]

There is nothing fundamentally wrong with debt.

Agreed. There is a lot wrong, though, with a system where money exists (by design) only as debt - i.e. a pyramid scheme.

[tomtomagain]

If you don't have debt then you cannot have "saving".

If you don't have saving then you cannot have investment.

If you cannot have investment you cannot have growth.

There is nothing fundamentally wrong with debt.

[BrilloPad]

So what will happen as its aging population starts to cash in their saving bonds in retirement?

Little boy

[CoolCat]

Its not just debt.

As a country our leaders are also showing an addiction to mass immigration and pushing for low wages commodity economy. No concept of aiming for the high value, high innovation, high quality end of the spectrum just constantly driving costs down. And employers subsidised in their low wage frenzy with top up benefits, tax perks for employing foreign nationals instead of Brits, etc.

An addiction to hyping house prices.

An addiction to QE.

And all the rest of it.

Its not going to end nicely.

[scooterscot]

Only to its own citizens. Which is why its not really a problem - like Italy.

Ahh but Italy has much more wealth that the UK. Twice the gold reserves and many assets that remain in Italian hands. No selling off the crown jewels to shareholders & hedge-funds.

[speling bee]

Only to its own citizens. Which is why its not really a problem - like Italy.

So what will happen as its aging population starts to cash in their saving bonds in retirement?

[BrilloPad]

Does Japan not have debt?

Only to its own citizens. Which is why its not really a problem - like Italy.