Does anybody understand debt? Some – but not many. Today’s post is less of my normal extended prose and more of an outline. I’ve been invited to speak at some writing classes here at the college and this is intended to serve as my speaking notes.
Numbers, Metaphors, and Stories
Get the terms right
Debt, Deficit, and tr/b/m-illions
$1 trillion = 1 million times $1 million
Measuring the Debt
Three Bad Metaphors
Government is NOT a Household
Govt Debt is NOT a Burden on future generations
Private Debt is NOT like Government Debt
Foreigners Don’t Control
A Sovereign Government Cannot “Go Broke”
Eurozone Countries Can “Go Broke”
Government Debt is Like Money that Pays Interest
But What About Inflation? Printing money?
Inflation involves real demand vs. real supply, not just $
Test on Debt: Interest Rates
Rates are historically low and staying low.
Are Gov. Deficits Necessary?
Yes, if you want to save money.
Are There Limits to Deficits?
Yes, but related to full employment and capacity.
In Practice, Nobody Understands Money.
Well they understand yesterday’s money, not modern money.
That’s why they don’t understand debt.