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Comment by aurailious | Hacker News Reader

> Does anyone actually still believe that these debts will all someday be repayed?

I don't understand why you would ask this question. On the individual level its obvious that some debts won't be. It happens all the time for a lot of reasons. So I assume you aren't talking about the individual level.

But on the macro level zero debt is a very bad idea and unless civilization collapses there will always be debt. Debt itself is a very good thing. Too much, and too little, of a good thing is bad.

So in either case all debts being paid off will almost certainly never happen.

> Does anyone even believe that the amount of debt will go down

In absolute terms due to inflation it always goes up.

> (that allows people to have negative amounts of currency)

You say this like its a bad thing. Debt isn't a bad thing. Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future.

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>Debt allows people to own homes and cars and pay for education and invest in business. Debt means you are optimistic about the future.

How about having homes and cars and education without debt?

It's not like you need to be in debt to another and to steal from your feature to have nice things...

I honestly do not understand this perspective and would like to be enlightened.

The only way a young person could be given a house without owing any debt would be if someone else bought it for them or if the government paid workers to build houses for everyone. However, if the government paid people to build houses without any payments in return the government would be collected the debt which it would then hold. This doesnt reduce any debt globally it just transfers it.

Maybe you could argue it is better for the debt to be on government than individuals but that doesnt address how no debt is good. No debt would just mean zero houses.

Previous generations bought homes in early 20s, and paid off their mortgages in 7-10 years, so by their mid-30s their housing expenses were rather low. And inflation helped with the payments too.

Our generation gets 25-year mortgages, and very little help from inflation.

When were you born, and what country do you live in?

As someone born in the 1980s in the USA, I don't think this is true. I believe that the 30 year mortgage has been the standard here since sometime in the mid 20th century.

My my area, which had median home prices most years, houses were 40-60% less expensive in real terms.

Another thing to keep in mind is that there far fewer homes and people made a lot less money.

Worse, we would end up with the student loan effect, which would mean that houses, like education, would explode in cost since there are no constraints on cost when you can just "charge it".

>Maybe you could argue it is better for the debt to be on government than individuals but that doesnt address how no debt is good. No debt would just mean zero houses.

You don't need a new house for every young person.

You can reuse houses across generations. 100, 200 and even 500 year old houses are not uncommon in Europe for example, if you build them properly (and not the el-cheapo wood US construction). They're not any kind of ruin either, but highly coveted city and rural real estate.

Plus, there's an existing pool of a hundred million houses or close, so you wouldn't have to worry about getting them a house either.

Lastly, debt means money owed. A government can also money it actually has (e.g. form taxation, dropping military expenses and so on). Presumably there's still that.

Not to mention that the government could still ask for payments for the houses, but for a much smaller interest, and without expecting a profit, allowing people to repay them much earlier.

This is not some communism plot, places from England to Singapore, most of EU and beyond have done public housing in different degrees. England's public housing plan, for example, implemented for the most part of the 20th century, turned it from a country of extreme poverty slums (think L.A.'s seedier districts but in Dicken's London and Manchester and elsewhere) into an acceptable middle class (they'd call it "working class") existence.

Using debt for homes, cars, education, and investments are generally assumed to be able to out grow the costs of that borrowing. For example, ideally a better education now means you can probably make more money over time, offsetting those costs and overall ending up much better than without borrowing. Its not stealing, to phrase like that is wrong.

If you only see these things as "nice", your should reevaluate what you value.

Personally I think we view education entirely too much as an individual responsibility. The worker isn’t the only one who benefits from the education. Companies, investors and society at large does too. So to push that cost entirely onto the individual and force a possible lifetime of debt is unreasonable. And that’s only possible because of debt.

Housing and cars - I’d agree. But for me the problem with debt is it seems like a ploy to squeeze more and more out of people who don’t realize the deal, or who because of encroaching levels of debt don’t have a choice in society.

If debt were purely opt in and people could simply not get into it while still having a first world life then I wouldn’t disagree with you at all. But as it stands debt is a requirement that permanently endentures far too many of our citizens.

>Using debt for homes, cars, education, and investments are generally assumed to be able to out grow the costs of that borrowing. For example, ideally a better education now means you can probably make more money over time, offsetting those costs and overall ending up much better than without borrowing. Its not stealing, to phrase like that is wrong.

All of the above things have stopped worked for the majority of middle class and most working class people for the past 30+ years in the US (and lots of EU).

"a better education now" doesn't "means you can probably make more money over time", but leaves you straddled with a large debt, as just another person with a degree in a huge pool of people who might not even make as much as their parents did.

And the huge debt crisis shows that people and countries alike increasingly can't "out grow the costs of that borrowing".

https://www.forbes.com/sites/patrickwwatson/2018/03/08/the-m...

https://www.brookings.edu/blog/social-mobility-memos/2018/06...

http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...

https://www.epi.org/publication/charting-wage-stagnation/

Debt is how the supply of money grows.

So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble.

There are other ideas about how we could grow the money supply of course. Perhaps the Federal Reserve could mail everyone some cash every month.

> So, sure, if a few people don't want to have any debt, that's great. But if everyone stopped borrowing we'd be in a lot of trouble.

Why would we be in trouble. Explain it to me like I know nothing about economics?

That's a big ask. Instead I'll point you to the best video I've ever seen on this subject, by Ray Dalio. It's long, but worth it.

https://www.youtube.com/watch?v=PHe0bXAIuk0

This will explain the opposite: https://www.amazon.com/Debt-First-5-000-Years/dp/1612191290

You are basically arguing that most people should never be able to own real estate, doomed to live as perpetual tenants. Over the course of a lifetime, that is actually more expensive than a 30 year mortgage.

And I think you're arguing that the disappearance of mortgages would have no effect on real estate prices. IMO, and that of many others, loose credit has been the major factor driving up property prices to their current insane heights.

There's a place for credit, but right now I think it does more harm than good.

On the contrary - no mortgages would mean I couldn't afford a house, and someone richer than me would buy it and loan^H^H^H rent it to me. They'd get richer, and do the same to the next person who couldn't quite afford to buy a house. You've described a society closer to feudalism than efficient housing.

And you would have a house to live in, while your own investments are diversified. How did homeownership work in Detroit?

Actually many countries around the world don’t have a healthy borrowing market and they do fine with real estate.

Some people have to live with family for a while or build in stages. It’s a challenge, but it’s doable.

yeah sorry that's not the life I want. I'm glad I didn't grow up in some country like argentina or whatever that has a no lending where I would have to live with my parents until I'm 35 and take my girlfriends to love hotels.

>yeah sorry that's not the life I want

Yeah, sorry, the life you want might not be sustainable and could be detrimental to society.

I find it difficult to reconcile this POV with environmental concerns. That elusive "debt" is 100% convertible to real resources (land, water). We have more debt because we consume too many things we don't need. How is that good?

"excessive consumption" based interpretations of environmental policy have done more damage to the cause of environmentalism then anything else.

Can you please provide any evidence for this? I am really curious and interested.

At the same time I have the impression., independent what the environment-protection-movements want to achieve or actually did, the state of the planet did not improve.

Is education something we don't need?

Education free of charge and accessible to every child, in my opinion, is the greatest achievement in human history.

However education for which you need to get into debt is something that I really don't think is a progress. It is still better than no education or education for which you have to join a political party or a religion, but it is actually a step back from free education.

Education can be bought for $1.50 in late fees at the public library.

The library was built by debt.

Perfect reply.

Or you can return your books on time and have it for free.

This reads like a person with Stockholm syndrome, captured by the Federal Reserve system. Money/currency does not have to be debt based. For a lot of America's history, it was not debt based.

Debt is older than money. Debt created money. You don't need a Federal Reserve to create money, you can make it yourself.

If I do work for you, and you can't pay, and you give me an "IOU", that is debt, and if I agree to make that IOU transferable that that is money.

The Federal Reserve system is simply one specific kind of money that is only special because the US government accepts it for tax payments and certain other kinds of money at illegal.

> For a lot of America's history, it was not debt based.

For a lot of America's history we used horses and sailing ships to get around. Are you suggesting we should return to that too? Otherwise this argument is empty.

It was even more concretely debt based when bank notes were IOUs against gold.

This reads like a person with Stockholm syndrome, captured by the crypto hype train. The entire point of money/currency is to have a standard unit of transferable debt!

People downvoting this comment: please provide reasons for disagreeing. You are not adding to the discussion by silently downvoting.

I started a reply, but honestly, I just don't feel like it's worth the energy to follow up with the replies I'd get. Probably because of the tone of the response.

I don't see debt as all that much different than insurance. Sure, society can get by without it, and you may never need it, but society in general benefits. If I run a business any large expenses would be amortized over the lifetime of that thing. I could pay for it upfront, but that might never happen and if I could it wouldn't be the best use of my resources. Ideally, I'd "pay rent" in order to borrow money upfront, now that I have that machine it's easier to pay back since that fixed cost will benefit me for the next 20 years. That's the scenario where all debt is never paid back.

Financial tools, like anything else can be good or bad depending on the circumstances and motivations at play. Payday loans (generally seen as bad) aren't all that different from micro-loans lauded in third-world countries. Let's say there's an older woman who walks out of town to buy goods and carries them back to town every day to sell (arbitrage). If she gets a small loan to buy more goods up front, invest in a wheelbarrow, or a booth at the market she can do more business and more easily pay off that loan benefiting; her, the person offering the loan, the sellers and the buyers--society in general. If she cannot pay back the loan she can get into a debit spiral. There are situations where that is beneficial to the person giving her the loan at the expense of her and the rest of society.

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