

Nobody understands debt - fiaz
http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=2

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gvb
_This is, however, a really bad analogy in at least two ways._

 _First, families have to pay back their debt. Governments don’t — all they
need to do is ensure that debt grows more slowly than their tax base. The debt
from World War II was never repaid; it just became increasingly irrelevant as
the U.S. economy grew, and with it the income subject to taxation._

Families got in debt trouble because they relied on their salaries (equivalent
to government's tax base) increasing faster than their indebtedness. The
problem was salary stagnation and layoffs broke this assumption. The
government is at risk of the same thing happening: their tax base _has not_
been increasing due to the economy stagnating.

I see people over their heads in debt who added to their debt when they were
in their 20s and 30s when their salary was increasing as a matter of course
because times were good and because they were young and learning new skills.
Unfortunately, they continued increasing their debt at the same rate but now
their salaries stopped increasing.

 _Second — and this is the point almost nobody seems to get — an over-borrowed
family owes money to someone else; U.S. debt is, to a large extent, money we
owe to ourselves._

I own a chunk of U.S. debt and I will _NOT_ be happy if the U.S. government
says "thank you for your donation."

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olegious
To increase the tax base, the US economy needs to grow again (3% is the
traditional "healthy" rate). To get it to grow again the government needs to
spend money- infrastructure ( put people to work), education and the like. The
danger we face is that for some reason we have forgotten economics 101 which
tells us that governments need to spend their way out of a recession, that in
the short term debt doesn't matter if you get the economy going again.

