Does Anybody Understand Debt?

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.


Background: What have you heard?

Krugman in New York Times

Harvey in Forbes

Background Info on U.S. National Debt

Brazelton:  The US CANNOT Go Broke


Numbers, Metaphors, and Stories


Get the terms right

Debt, Deficit, and tr/b/m-illions

$1,000,000,000,000

$1,000,000,000

$1,000,000

$1 trillion =  1 million times $1 million

Debt


Deficit

1984-present U.S. Federal Budget


Measuring the Debt

Counting Absolute Dollars of Debt Deceives. It's All Relative.


Three Bad Metaphors


Government is NOT a Household

Government is NOT like a Household!

Econproph: Once Again, Government is Not Like  a Household


 Govt Debt is NOT a Burden on future generations


Private Debt is NOT like Government Debt

Federal Reserve Breakdown of Household Debt

Foreigners Don’t Control


So…

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.

Forever?   Yes.

Econproph: But What About National Debt-to-GDP Ratio? Not a Problem, Really


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.