I never understand anything about money until I translate it meaningfully into time terms. Like 2T in deficits... how many future years have we mortgaged away, and to what extent? How do we measure that? How many more hours will you have to work for comparable standard of living?
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Replying to @vgr
I'm not sure that the translation can be done. Nations really are not like households, and national debt is not like your credit card.
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Replying to @rob_knight @vgr
micah.fyi Retweeted Allen Smith
micah.fyi added,
Allen Smith @magnameterReplying to @vgrThere are about 100 million US households above the poverty line, so the math is easy for big numbers: Every $1 Billion = $10.00 to your household The $1T budget deficit last year = $10,000 your household spent above what it took in $2T bailout = $20,000/US household1 reply 0 retweets 0 likes -
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Really? Please explain why. I agree dividing per person is not enlightening, but per household seems to have some value. Don't say something about corporate taxes. Corporations don't pay any tax, they just collect tax from their shareholders
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It's not like the government is borrowing money on behalf of the citizens, with citizens gaining a pseudo-liability in proportion to the amount of taxes they pay. Most of that debt will never be paid back, and the system depends on it not being paid back.
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But that’s the point: you don’t “pay it back” in dollars, you pay it back in terms of constraints on future freedom. For eg: uneven inflation means you might have to work harder to maintain lifestyle, or accept a downgrade because the debt is paying to fix/heal stuff elsewhere
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Replying to @vgr @rob_knight and
Thought experiment: in a village of 100 farmers, 50 come down with an illness. To maintain their farms in productive condition while feeding them, the other 50 work 2x as hard. It’s that or lose half the humans and their sunk costs.
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Replying to @vgr @rob_knight and
Collectivized societal debt merely imposes a structure in such calculations. Tech predictably alters leverage (ratio of retirees to workers has increased 4x but total factor productivity has kept pace), But sudden increase in load means tech productivity falls behind for a while.
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In fact debt is best understood as checks written against future tech productivity increases — ie innovation returns on economic activity. Which may not happen, or happen much more slowly, in proportion to the burdens.
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The reason everyone hates macroeconomics and fiat money in particular is because it doesn't work anything like thought experiments about a hundred farmers!
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Replying to @rob_knight @vgr and
The thing that's real here is a massive loss in productive capacity over the last month, and reasonable projections that this will continue for some time, and that the economy will be less efficient once the disruption is over. The deficit is just accounting.
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