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I need help but first a little about my self.I am a middle age  bald guy been to college got a associates degree in general studies so I can read ,write and count to hundred in three languages no less lol. So here is the problem I guess I don't understand economics! DEBT AND DEFICITS OH MY!!! I have had many macro economics debates with teabag friends about the deficit and debts and cant seem to get why they have their panties all in a bind over them.I try to understand but ive come to the point where im starting to believe im just stupid because the problems they  worry about in the big picture don't seem to express themselves in the small picture like family economics that they keep parroting as the bench mark that the government should live by. So back to myself.I own and run a small vending business and during the last decade I was the poster boy for people that took advantage of the banks irrational lending standards.I would buy distressed real estate fix it up than get a home equity line against it and than repeat the process .I rented the houses out sold a few and now

own 7 .My total debt is around 200,00$ my total equity is around 500,000$ between the rentals ,the vending business ,and part time "real" job we bring in before taxes and deductions is 82,000$ so as you can see i owe almost 3 times as much as I earn a year. So when talking to teabag friends and the topic comes to the national debt and the inflation they worry about and  im like so what ,, don't care .That gets them so mad its funny but than I go on to explain why it doesn't matter  but it doesn't sink in .My debt was incurred with yesterdays dollars  and I pay that debt with tomorrow's dollars. If inflation goes up so will my pay simple as that and over a long period of time as pay and expenses go up nationally my personal debt will vanish because its in yesterday's dollars getting paid with tomorrow's dollars which i will have more of and will be worth less than today's dollars. Think of it like this; go back to 1970 buy a house but pay for it with 2013 dollars ! That would be a great deal! My parents house bought in 1970 cost them 25,ooo$.It was a 4 bedroom 3000 sqft house in Merrimack N.H. the suburbs of Boston mass.At the time my dad made about 15 grand a year and it was hard to pay off with those days dollars but today's dollars it would be a cinch..He was a aircraft controller and today those guys make  5o grand  a year.Taking out debt helps us invest in ourselves ,if it is done with a certain control it wont be a problem to us or our grand kids .The people that get hurt are the very rich and the banks. They hate inflation!! its like theft to them because its their dollars that are borrowed today and paid back with tomorrow's dollars that will be worth less than today's with out a doubt. The other folks that get hurt are people with large amounts of dollars saved in a bank or worse in a mattress because as those dollars sit there they shrink in value over time but again who does that? They very rich does! The days of our elderly saving thousands of dollars in a savings account are over they just don't do like they did 50 to a hundred years ago they put that money in IRA'S,401 K's or any number of inflation protected investments .You know this to be true because we are tomorrow's elderly and where is our savings? Its the rich who own this gov't and run this country who will lose with inflation you and me wont..If any ecomics proffessors are out help me out is this true or am i very misguided.

Poll

are you worried about the defict?

25%4 votes
75%12 votes

| 16 votes | Vote | Results

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Comment Preferences

  •  right now, with the current situation, my (1+ / 0-)
    Recommended by:
    NancyWH

    broker tells me paying down unsecured debt is the best use of my available cash, assuming inflation does not heat up and if it does, it will not get hot enough to offset credit card interest rates.

    However you are fortunate to have $300k in net worth (albeit it is probably illiquid and not cash more than likely) as the average family has a worth of $75K I think and average retiree of $150K  

  •  Explaining country finance as being similar to (1+ / 0-)
    Recommended by:
    NancyWH

    a household's finances is not helpful when done by the right or left.  There are very large differences between the country and a household, and the differences involve concepts and issues that few people deal with in their lifetime.

    So if anyone says they understand the country's finances in parallel terms to personal finance, that is proof in itself that they don't understand the topic.

    The most important way to protect the environment is not to have more than one child.

    by nextstep on Fri Feb 22, 2013 at 03:09:11 PM PST

  •  Think of dollars as similar to marriage (0+ / 0-)

    certificates. Married people owe each other love and devotion. Getting a certificate doesn't create that or change that, but it does let other people know of the commitment. Certified IOUs (dollars) do the same. The only difference is that there are more of them and they are easier to pass around for other people to satisfy.
    The Congress trying to ration dollars is not very different from some people trying to argue that because they won't give them certificates, gay people can't marry each other.
    See, it's false. But, the people who hold these attitudes do so because they are afraid of change. They still want dollars to have an intrinsic value, like a little chunk of gold. In fact, a bill, regardless of the denomination costs about eight cents to produce and distribute.
    Last year, the Bureau of Engraving and Printing shipped out three billion hundred dollar bills. Most of the bills, it is reported, end up overseas, 'cause lots of people like to use our money. The American people have great credit.

    Why do instinct-driven people worry about deficits? I think it's because they have some sensory deficits they don't want to admit. Like --

    no sense of time
    no sense of direction
    no sense of order
    no sense of sequence
    no sense of propriety
    no sense of privacy
    no sense of connection
    no sense of situation
    no sense of self

    A lot of that may be connected to their integument, the skin, wherein lies the sense of touch. When we say they are "out of touch" it may be literally correct. A tell may be that their movements are often so awkward.

    We organize governments to deliver services and prevent abuse.

    by hannah on Fri Feb 22, 2013 at 03:47:52 PM PST

  •  I will just be glad (0+ / 0-)

    when we pay off what's left of our mortgage [< $10,000, my parents hold it], & I pay off the last of an $8,000 hospital bill one daughter ran up in 3 days, no insurance. I took on a payment plan to save her credit rating.  It worked!  She was able to get what student loans she needed for CC on her own.  I swear, Mr & I could buy another house, if I didn't "have" to help daughters, both coping with crappy economy.  Where you stand really depends on where you sit these days, doesn't it?  

    "The light which puts out our sight is darkness to us." Thoreau

    by NancyWH on Fri Feb 22, 2013 at 03:53:24 PM PST

  •  We're good (0+ / 0-)

    200,000$.  Really?  The rest of the world would call that $200,000.  Or ¥18,653,000.  Or €151,593.  Or £131,005.  You get the idea....

    The difference between any business or family finances and a nation with a sovereign currency is that the nation can create money.  The accounts do not have to balance.  As terribly troubled as Greece's finances are (really, really bad), if they still had the drachma it would devalue and they could export.  Now, they've fucked themselves.  Keep in mind that the Greek problem is nothing like the American problem.  Greece's government at all levels is totally corrupt.  The people pay bribes to the tax collectors so they don't have to pay taxes.  Greek government employees are greatly in excess of the numbers needed and they are greatly overpaid compared to  Greek private employment standards.

    For the U.S., as long as our gross domestic product grows faster than our debt, we're good.  Even where we are today, there is no sign of trouble.  Smart rich people all over the world are paying the U.S. to keep their money safe.  True.  They are buying 10 year U.S. treasury notes for less than 2% interest.  That is below the rate of inflation, so they are losing real money.  But the richest, smartest people in the world feel it is SAFE.

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