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dullbananas ,
@dullbananas@lemmy.ca avatar

Biden: ^It’s\ working^

Trump: Hang

RFK Jr: Can I offer you a zipline video in this trying time?

solsangraal ,

putting people in debt is how people with already too much money make even more money from people who never had enough

Maggoty ,

Credit scores require you to get some kind of debt. This is because it’s not a score of your financial health. It’s a score of how reliably you repay your debt.

Semi_Hemi_Demigod ,
@Semi_Hemi_Demigod@lemmy.world avatar

Terry Pratchett’s “Making Money” taught me enough economics to know that individual debt and national debt are two different things.

gravitas_deficiency ,

Two things:

  • if you owe the bank $34,000, it’s your problem; if you owe the bank $34,000,000,000,000, it’s the bank’s problem.
  • its a big club, and you’re not in it.
Lightfire228 ,

That’s a lot of zeros, when written like that

gravitas_deficiency ,

Yes, and it is the correct number of zeros to use. I find it helps to put things into scope. “Trillion” is an abstract magnitude to most people. Writing it out numerically makes it clear how absolutely enormous the number is.

pigup ,

I heard that the us still has good credit because although it owes trillions, it is worth quadrillions (all lands and assets), so not really a concern

Bytemeister ,

Worth pointing out that credit scores are completely detached from the government. They are entirely private industry, that is collecting and selling your financial info without your consent or opt in. If you were born before 2004, then they have also accidentally leaked literally all your personal info to the dark web, with literally 0 consequences.

Maggoty ,

Nah uh! We forced them to pay an hour’s worth of profits to their own charity!

NutWrench ,
@NutWrench@lemmy.world avatar

Well, since the billionaire class doesn’t pay it’s fair share of the tax burden, that money has to come from somewhere.

ryathal ,

This is a popular thought, but even if we take 100% from the billionaires it pays for almost one year for the US.

TheOakTree ,

Now imagine if we had taken 30-40% from billionaires every single year… hmm…

ryathal ,

We could have a couple year of almost not having a deficit.

RogueAozame ,

While I understand what assumption you’re running under no one said for only billionaires to pay. The idea is progressive tax brackets the less you make the less you pay percentage wise. We also need less loopholes for the people that can buy lawyers and manipulate their funds to get out of paying what they should. There is no reason companies and the extremely wealthy should be paying an effectively less tax percentage than the diminishing lower middle class.

ryathal ,

It’s not about only billionaires paying, it’s about them not being a magical money source. A higher rate might feel better, but it’s not solving government revenue problems.

RogueAozame ,

It will not suddenly balance the budget but it is funding that will either reduce the deficit, or reduce the burden on poorer people. We can’t fix decades of poor decisions with one good decision, it’s simply a good decision we can make now that will help.

wildcardology ,

And it’s rising at $1 trillion per 100 days in interest.

dependencyinjection ,

On a serious note. Are there any countries without any national debt? Because if not then clearly capitalism is broken right?

Varven OP ,
@Varven@lemmy.world avatar

clearfinances.net/countries-without-public-debt/

toddestan ,

Well, that’s a misleading title. All the countries in their list have some debt, just less than most.

All countries carry some debt, because they need to show a history of reliably making payments on that debt in case they need to borrow money in the future for whatever reason. Not all countries, however, run massive deficits every year.

Takios ,
@Takios@discuss.tchncs.de avatar

I’m not the biggest fan of capitalism myself but the existence of debt does not mean it is broken. Debt is a mechanism to allow for solid investments, e.g. building infrastructure or schools that will create a net positive in the (far) future.
Germany for example has enacted a Schuldenbremse (debt-break) in 2009 and forbids our states to take on new debt and limits the debt taken on the federal level to a minisule percentage of the GDP. Our infrastructure is currently slowly but noticeably crumbling away, bridges are getting closed for heavy traffic and experts say many of them have become irreparable due to missing maintenance and need to be fully rebuild in a few years. The local military barracks are in such a desolate condition that the soldiers need to drive two towns over to shower. We might not take on financial debt, but an infrastructure debt that will demand an even bigger toll on us.

dependencyinjection ,

If 90% of the countries in the world are in debt and corporations have more money than god, then clearly the system isn’t ideal.

$34T is insane for one single country.

As for infrastructure, proper taxation of corporations would raise more revenue to fix such things. If Amazon is contributing to the breakdown of roads due to all the couriers then they should be paying more tax.

Look at the water companies in the UK. Paid out their shareholders for decades and did nothing to improve the infrastructure which is now likely to end up with them being nationalised after they’ve looted what they could.

WldFyre ,

I think you entirely missed the point haha

volodya_ilich ,

I’m as much of a leftist as you are, and I’m sorry if I sound a bit pretentious here but the analysis you’re doing of debt is wrong.

States generally create their own currency, and generally get indebted (i.e. issue state bonds) in their own currency. You can see how a state that creates its own money doesn’t really need debt to be able to pay for stuff, debt is just a political decision, sometimes misguided by people who don’t really understand it properly, sometimes properly guided by experts.

A state doesn’t need taxes to fund itself either. If it needs to build roads, it can literally create the currency to hire the workers to extract the resources, plan the roads, and build them. Taxes have many purposes such as removing money from the private sector to prevent or reduce inflation, disincentivizing certain behaviours (for example tobacco taxes), lowering inequality (for example progressive income taxes), or even making people use your currency instead of another (people in the private sector will end up using your currency if they are forced to pay taxes in that currency).

Taxing companies and rich people is useful because you place the burden of reducing money for inflation purposes on them instead of on the lower income people, and therefore you reduce inequality, so I obviously support at the very least heavy taxation of income and wealth of private individuals and companies, but the state really doesn’t need taxes to fund itself since it creates its own currency and pays in that currency.

dependencyinjection ,

So I preface by saying finance isn’t my forte, but I would like to raise a few thoughts I had whilst reading this.

The first is that the state can just create more currency to pay for things, which to my understanding is not always the case, if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.

The other point is on the no need for taxes and that we tax the richest and the corporations to remove some of the money supply, clearly this isn’t something that happens as taxes for both of these is rarely raised at the same rate it is for regular people.

Finally, we have most people, in the western world at least, living literal pay check to pay check whilst the likes of Microsoft have gone from less than $2B to over $3B in a few years. The same can be said for Nvidia and many many more.

Edit: I guess my point is, just because this is how things work doesn’t mean things shouldn’t change. Clearly something is broken.

volodya_ilich ,

if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.

Notice how I didn’t say that the state should create infinite currency, I’m just saying that the limit isn’t based on taxation. And funnily enough, if you look at basically all inflationary episodes in developed countries over the past century, they’ve happened as a consequence of problems with the supply of goods, not as a consequence of excess currency creation. 2022 inflation? Energy prices and supply chain bottlenecks as a consequence of Ukraine invasion and post-covid effects on production. 1970s inflation? Fuel prices… Really, I encourage you to look up a graph of inflation for, say, the USA, over the past century, to look at the inflation peaks, and to make a Google search “crisis of 19XX”. You’ll find that the inflation was in basically all instances prefaced by a big external event, and not by money creation. Moreover, many of these inflation events happen simultaneously in countries such as the US, UK, Japan and Germany, all of which have different central banks, different currencies, and different rates of currency creation.

Also, there’s countless examples of vast increases in money supply without inflation. In the decade of 2010-2020, the EU has created VAST amounts of euros with basically no meaningful inflation. You can look up the Euro monetary mass M2 or M3 over the past decade, you’ll find a huge boom, without any effect on inflation. Again, all of this isn’t to say there isn’t a practical limit to how much you should create before destabilizing the economy, just that the limit is absolutely not imposed by how much you’re collecting in taxes, and it depends a lot, for example, on which part of the capitalist boom-bust cycle you are. Another argument for this, is that money creation doesn’t have to be just that, it can imply an increase in the amount of available goods and services. As a stupid example, the US government could open a state-funded iron mine and a refinery, hiring all the employees with newly minted currency, and that would effectively increase the total amount of goods and services in circulation, which can balance out the supposed inflationary effect of the currency creation.

About taxes not being currently used practically to reduce inequality, I agree, but that’s not a point against the nature of taxation, that’s a point against the current decision of who we’re taxing, what for, and how much. I absolutely agree with ramping up the taxes of huge multinational companies and their directives. It’s just, if we see taxes not as a necessity to fund the state’s activity, but as a necessary tool to reallocate money in the economy from rich people to poor people and to create a welfare state and a great infrastructure, it’s much easier to explain why Amazon should pay 90% taxes and your average low-paid worker only 10%.

As for your last point with inequality between companies’ income and that of people, I couldn’t agree more, I’m a hardcore leftist and I want to reduce wealth inequality extremely, again, I’m not arguing for lowering taxes “since they’re not necessary”, I’m arguing for reallocating the taxes in a much more progressive way to disincentivize certain behaviors such as speculation, and to reduce inequality between the richest and the poorest.

Thanks for the civilized discussion, it’s good to be able to actually discuss this stuff.

dependencyinjection ,

No. Thank you for giving me some food for thought and areas to research to further my understanding, rather than talking down to me due to my lack of knowledge on the macro economics of the world.

I really do appreciate you taking the time.

volodya_ilich ,

To be fair, it’s not you lacking knowledge, it’s a fundamental problem in the field of economics, which because of political reasons, has been dominated for the past decades by neoliberalism. The problem is that neoliberalism reaches conclusions that have been falsified by experimental data in several occasions, but since it serves the ideology of the elites, it’s peddled constantly in media by prominent “economist” propagandists. If you’re interested into the topic and this modern, more empirical vision of the economy, the field is called “Modern Monetary Theory” or MMT. There’s a documentary released recently about the basics of it, applied to the US, called “Finding The Money”, and I can also recommend the YouTube channel called “Unlearning Economics”, which isn’t MMT per se but it’s very keen on treating economics through empyrism.

AngryCommieKender ,

You missed the biggest flaw in the “money creation = inflation” argument. That would be Japan. They’ve been printing money full tilt for the last couple decades, and are just barely staving off deflation

volodya_ilich ,

Interesting, I’ll look up the monetary mass of Japan over time, thanks!

pearable ,

That sort of thing can happen in extreme situations. Zimbabwe and Weimar Germany are the most prominent examples. Both examples involved not having enough stuff. When there aren’t enough necessary goods to buy and people have plenty of money you’re going to get inflation. Using the right combo of subsidies, government run production, purchase quantity limits, reserves, vouchers, and price fixing you can ensure the supply is stable and eliminate inflation even if there’s lots of money.

That’s true. That happens because people are stuck in the narrative of the government needing a balanced budget, just like a household. It also happens because the owners and the corpos use all their money and power to ensure workers pay taxes and thus decrease worker money and power.

Yeah, if the population was educated on MMT the ability to bring corpos to heel would be significantly increased. People arguing for it are fundamentally arguing for a change in how we think about money.

sunbeam60 , (edited )

No, if anything it shows capitalism is working. When you can increase or tighten money supply (ie when you can print and shred money) debt isn’t what you think it is. A state with money issuance powers is not a household.

I can thoroughly recommend “The Deficit Myth” book by Stephanie Kelton, if you wish to understand modern monetary policy better.

Or watch the film Finding the Money: youtu.be/3HRgsYSLOYw?si=g_CgqMWtC7oBCkGn

And to answer your specific question, there are countries with very low debt, but that’s usually due to either not being able to “borrow” money (again, borrowing doesn’t always mean what we would think as borrowing when you can issue your own money), being locked to another currency (Denmark is a great example - amazing economy and locked to the euro) or having a large generation of wealth (typically oil). Larger countries can issue debt more easily.

psud ,

The debt we’re talking about here (as opposed to deficits) is practically all bond sales, isn’t it?

volodya_ilich ,

Yeah. It’s another form of creation of money. It’s a useful tool for some things, like the central bank being able to control interest rates in the economy, as shown during the recent inflationary episode.

sunbeam60 , (edited )

Yes more or less, that is indeed how the central bank creates money most of the time; the government creates a piece of paper that says “IOU 100k and I’ll pay you 5% interest on it for 20 years and then I’ll return your original 100k to you in 20 years” (that’s a bond), which they sell on the open market, at auction (where the variable element is the interest rate someone is willing to accept). When the central bank wishes to increase the money supply they buy government bonds on the open market (ie from other holders, rarely from the government directly) by materialising money out of thin air.

When they wish to shrink the money supply they sell their government bonds and destroys the money that they receive from the sale.

wesley ,

What do you mean by Denmark being locked to the euro? It has it’s own currency

nyctre ,

Denmark has not introduced the euro, following a rejection by referendum in 2000, but the Danish krone is pegged closely to the euro (with the rate 7.46038±2.25%) in ERM II, the EU’s exchange rate mechanism.

So if euro gets stronger, so does the krone. If euro drops, so does the krone.

wesley ,

Okay, makes sense

sunbeam60 , (edited )

<giggle.gif>

Not really. They’ve got a version of the euro, called kroners, which allows Danes to believe they have their own currency. They are locked into an exchange rate band (extremely tight) which means the Danish central bank has to follow every decision the ECB takes within minutes). And this makes complete sense, in that it’s a compromise that’s edible by voters (maintaining the illusion that Denmark didn’t adopt the euro) and edible by business (allowing businesses in Denmark to participate fully in the common market).

And that’s one of the reasons Denmark has such small national debt and runs a government surplus - they can’t really invent new money because it would break the bond with the euro. So the Danish budget is sort of a “household budget” in that in contrast to, say, Sweden, they cannot create money (meaningfully) and the books have to balance (which they do; lots of oil, Novo Nordisk, Maersk, Vestas and a few other big international plays who still pay a majority of their tax in Denmark obviously helps a lot).

Fades ,

Hey bud, guess what? The gov don’t hand out a credit score, the banks do.

This entire meme is just OP admitting they don’t know how finance works in the US.

dependencyinjection ,

It’s a meme not a dissertation on finance.

From one pedant to another, you’ve gone to far this time.

Varven OP ,
@Varven@lemmy.world avatar

At least someone has it right

flerp ,

Where did they say the government handed out credit scores? The meme was pointing out a double standard, not saying the government hands out credit scores.

This entire comment is just you admitting you have below average reading comprehension.

Tikiporch ,

How much does the USA have in assets? I’m willing to bet more than $34,000,000,000,000.00.

barsquid ,

They could sell Wyoming to Canada, that’d be alright with me.

InputZero ,

Canada couldn’t afford it, their monopoly money is worth almost nothing.

Vej ,

I wonder how many debt collector calls the Whitehouse gets a day

Bishma ,
@Bishma@discuss.tchncs.de avatar

The US has a fantastic credit score. Being the world’s reserve currency helps.

Thcdenton ,

And collateral lol

whotookkarl ,
@whotookkarl@lemmy.world avatar

I’m not even one trillion in debt

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