[BirAdam]

Yes. And it’s actually correct. I’ve thought that US financial system and US dollar would fall since I was roughly 13. The problem is that at some point central banks and governments will be unable to avoid hyperinflation due to debt accumulation. They will be forced to print. Additionally, the debt is inevitable when politicians are bought and paid for and therefore incentivized to provide lucrative contracts to donors, and when interest rates are so low that borrowing is a good idea for private parties. On another note, there is inherent instability in debt-based economics (I don’t think capitalism actually exists at this point, as that word implies the accumulation of capital and current systems substitute capital with debt). If dollars are created through debt and leveraging that debt (as is the case in the USA) a massive default scenario like 2008 becomes a matter of time. If that scenario is large enough it will trigger a deflationary depression that will only further encourage printing as the central bankers try to avoid making all of the debts too expensive to carry. The fact that we’ve avoided a collapse of the current system for so long is more due to cleverness and media cover than anything else. The bankers figured out new ways to manipulate the economy and stall the inevitable but math is real and you can’t do it forever. On a final note, debt based economics will always sacrifice the wealth of future generations for the sake of the current, and this is being felt right now as younger generations are struggling to get started, and the the older generations are living in relative luxury.

[zuminator]

"At some point" does a lot of heavy lifting. Without any information to quantify when this breaking point might occur, one might as well be talking about the heat death of the universe.

And what do you mean by "sacrifice the wealth of future generations for the sake of the current"? The government issues bonds to pay for stuff. Then at some point :) the bonds presumably become due, and future generations have to pay it back. Whom do they pay it back to? Isn't it back to themselves? Even assuming there's some proportion of foreign debt holders, they're getting paid back in the currency of the issuing state, which currency has generally deflated more than the bond rate over time, in other words effectively an interest free loan. If you could get a less than base inflation rate loan for 20, 30, 50, 100 years wouldn't you take it? Even assuming the 100 year horizon and thus the loan was to paid back by your estate, don't you think there's a good chance your estate would come out ahead after having paid back that low interest loan than if you had never taken the loan in the first place?

I'm just saying I'm not fully convinced that taking on national debt is universally bad, if it's payable in the sovereign currency.

[BirAdam]

Yeah, I’ve thought an economic calamity was likely for over 20 years. As I stated, the math is there but the timing is always unknown. We’re talking about the actions of billions of human beings, and therefore it’s difficult to predict with certainty. What can be said definitively is that the debt service of the US federal government will exceed the current defense budget by 2025. Things are getting closer and closer.

[naijaboiler]

You know nothing about economics

[BirAdam]

Okay, but I like discourse. Do you care to elaborate and state your disagreement? (Friendly tone here, I really do like discussions)

[JKCalhoun]

> future generations for the sake of the current, and this is being felt right now as younger are struggling to get started, and the the older generations are living in relative luxury.

I don't disagree with your overall point about sacrificing future generations for the current, but this specific point is probably true regardless as luxury often takes time to acquire.

[Zaskoda]

> On another note, there is inherent instability in debt-based economics

From an adequate distance, fraction reserve banking looks a whole lot like a ponzi scheme.

[w1nst0nsm1th]

No. It's not.

The 2 phenomenons are very different, if you trace monetary movements from one economic actor to another. They are not even close. It's like comparing a hat and a car.

https://www.investopedia.com/terms/f/fractionalreservebankin...

https://www.investopedia.com/terms/p/ponzischeme.asp

[Zaskoda]

Let's look at your link for fractional reserve banking:

"Banks only need to keep a specific amount of cash on hand and can create loans from the money you deposit. "

So a bank can loan out more money than it has to loan. In addition to creating money out of thin air, that loan will accumulate interest fees.

It gets even worse when these loans are made to another bank who will loan that money out again.

No, let's look at this system, as I said, "from a distance." The entire system has X number of dollars in it and Y amount of loans. It doesn't take long and the amount of debt exceeds the amount of actual dollars that exist in the system. That is to say, there isn't enough money in the system to pay all of these loans back.

It's worse than a Ponzi.

[marcosdumay]

Only if the debits are large enough.

Interest-paying debit can be quite healthy. It does not have to be a ponzi scheme.

[imtringued]

You mean any banking scheme where creditors decide when debts are paid.

[BirAdam]

I would say it is, yeah.

[imtringued]

Japan has had 0% interest for decades. It doesn't appear that there is actually an interest based time bomb if we entertain the idea of zero or even negative interest rates. It is only a problem when you insist on positive interest because if the exponential nature of compound interest.