• humorlessrepost@lemmy.world
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    7 months ago

    If you had 34 trillion in debt and a centuries-long history of making on-time payments, you’d have a perfect credit score.

    • Artyom@lemm.ee
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      7 months ago

      The US govt basically has a perfect credit score. They have almost infinite payment history and almost infinite available credit.

    • volodya_ilich@lemm.ee
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      7 months ago

      Don’t forget being the only issuer of the currency you get indebted in. If I could get indebted in a currency I create myself, believe me I would

      • JasonDJ@lemmy.zip
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        7 months ago

        Articles and posts like this really just exist for conservatives to shout that we need to stop federal spending and cut out “unimportant” things like Dept of Education, as described in Project 2025.

        The problem is that debt is good. It enables us to pay for infrastructure projects and services. It doesn’t work like a household budget…not on the scale of international economies…because money “in the bank” is money that’s not in circulation.

        When money is not in circulation, it’s not being used to pay for goods and services…it’s just…sitting there being hoarded.

        You all complain about Musk hoarding a few hundred billions. Imagine if the debt were in the opposite direction and the government had $34T sitting in the bank doing nothing.

        And anyone can buy Treasury debt. In fact, last year it was an AMAZING return on investment for anyone that bought into it and holds into the debt for a few years. One of the safest places anybody could put money to earn a return (behind a HYSA at FDIC insured banks).

        • Semi-Hemi-Lemmygod@lemmy.world
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          7 months ago

          When money is not in circulation, it’s not being used to pay for goods and services…it’s just…sitting there being hoarded.

          This is why I think the velocity of money should be a key economic indicator. Money moving around and doing work is what makes an economy better for everyone. When it starts to pool in the economy it slows down and benefits only a few.

          This is another thing I learned from “Making Money”

        • volodya_ilich@lemm.ee
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          7 months ago

          Fully agreed, the whole “Debt bad! Deficit evil!” trope is just neoliberal propaganda against public expenditure, which translates into a weakening of the welfare state

          • InputZero@lemmy.ml
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            7 months ago

            I’m not a financial expert, so someone who is please step in and correct anything that I say is wrong. I need to learn too.

            It’s because the government’s debt is also a surplus. Government debt isn’t like personal debt because the government debt is mostly through selling bonds that the government issues. Most of that debt is owned by American citizens, in one way or another, who buy those bonds. Most of that $34 trillion is money the government owes it’s people, or at least the Americans who hold those bonds.

            It’s not really money you owe but it’s money that is owed to you. Well actually the billionaire class who can actually afford to buy these bonds but hey, that’s Capitalism baby.

    • disguy_ovahea@lemmy.world
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      7 months ago

      Credit rating also depends on credit to debt ratio. You want to keep it below 35%, so you would need a credit line of $100T or more to have a great rating.

      • humorlessrepost@lemmy.world
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        7 months ago

        I think sovereign debt would work like an AmEx Platimum with “no fixed limit”, which makes the algorithm ignore utilization.

  • IrateAnteater@sh.itjust.works
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    7 months ago

    Are you immortal? Do you have an income vastly higher than the servicing cost of that debt? Do you owe the large a majority of that debt to yourself? Are you able to, if push came to shove, tell your external creditors to go fuck themselves and dare them to so much as try to collect on the debt you don’t feel like paying? If you can’t answer “yes” to all these questions, you aren’t the US and have a debt situation that has absolutely nothing in common with the US debt.

          • Maeve@sh.itjust.works
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            7 months ago

            I remember users on another platform went into full rage mode when I said the stock market was just legalized gambling, telling me how SAFE!!! IT IS IF YOU DO YOUR RESEARCH!!!>

            Okay. Black Friday and Too Big to Fail only happened in my dreams.

    • Tlaloc_Temporal@lemmy.ca
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      7 months ago

      US debt is currently higher than their GDP. Even if they could leverage the entire country into only paying debt (they can’t), it would take over a year to pay off. At the current average interest rate of ~3%, that’s enough to pay for the entirety of NASA’s budget five times over.

      The last time US debt was greater than their GDP was the second world war.

      • volodya_ilich@lemm.ee
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        7 months ago

        …or, since the federal reserve creates money, they could do quite literally 100 strokes on a keyboard at the FED and repay the debt. A state doesn’t fund itself through taxes, taxes serve many purposes but funding a state isn’t one of them.

      • hydrospanner@lemmy.world
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        7 months ago

        Ignoring, for a moment, the inherent and fundamental differences between an individual and a state…

        …in my late 20s and early 30s I bought a new car.

        At the time, that car cost more than I had in my accounts plus my other possessions at the time. In fairness, my annual income was more than the total cost of the car, buuuut I also was carrying tens of thousands of dollars of student loan debt as well, meaning my overall total debt was significantly higher than my annual income, or my “personal GDP” if you will.

        Yet when I applied for my car loan, it came through with easy approval and I even qualified for the best possible interest rate.

        Why? Because I’ve always paid on my debts adequately and promptly.

        Nobody bats an eye when a couple buys a house that costs more than what they can cover with their combined income in one year. Why? Because that’s an arbitrary and unrealistic yard stick of comparison and nobody expects them to pay off a house in a year. They’re able to buy their house and live in it immediately, and pay for it incrementally, over time, as they earn over the coming years because of debt. And the bank is willing to lend the money because they’ll make money in the long run through interest.

        Similarly, it’s unreasonable to imply that the US shouldn’t carry more debt than it’s GDP because the two metrics aren’t directly linked in any way. And since the US has excellent credit worthiness, that debt is far safer than the bank’s loan to the homebuyers. And the US gains access to borrowed funds by setting it’s own interest rates through the Fed, which tells lenders exactly how much they’ll make in interest if they let the US government borrow some of their money.

        And since the US is a safer bet than homebuyers, that’s why home interest rates are higher than the rate at the Fed: if they were equal, banks would never lend to homebuyers since they could get the same return by lending to the government. So instead, they set their own, higher rates for homebuyers, to account for the higher risk of lending to a party who has a much higher likelihood of default.

      • candybrie@lemmy.world
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        7 months ago

        They said service the debt, not pay off the whole thing. For an analogy, your whole mortgage being less than your annual salary isn’t a requirement; your monthly mortgage payment being a fraction of your monthly salary is.

  • gravitas_deficiency@sh.itjust.works
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    7 months ago

    Two things:

    • if you owe the bank $34,000, it’s your problem; if you owe the bank $34,000,000,000,000, it’s the bank’s problem.
    • its a big club, and you’re not in it.
      • gravitas_deficiency@sh.itjust.works
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        7 months ago

        Yes, and it is the correct number of zeros to use. I find it helps to put things into scope. “Trillion” is an abstract magnitude to most people. Writing it out numerically makes it clear how absolutely enormous the number is.

  • Bytemeister@lemmy.world
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    7 months ago

    Worth pointing out that credit scores are completely detached from the government. They are entirely private industry, that is collecting and selling your financial info without your consent or opt in. If you were born before 2004, then they have also accidentally leaked literally all your personal info to the dark web, with literally 0 consequences.

    • volodya_ilich@lemm.ee
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      7 months ago

      Ugh… Here we go again with the social credit… It’s been debunked so many times that it’s not even funny anymore. You can ask any Chinese person about it and they don’t even know what it is because it’s really not a thing. Financial credit scores on the other hand…

  • NutWrench@lemmy.world
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    7 months ago

    Well, since the billionaire class doesn’t pay it’s fair share of the tax burden, that money has to come from somewhere.

    • ryathal@sh.itjust.works
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      7 months ago

      This is a popular thought, but even if we take 100% from the billionaires it pays for almost one year for the US.

      • RogueAozame@programming.dev
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        7 months ago

        While I understand what assumption you’re running under no one said for only billionaires to pay. The idea is progressive tax brackets the less you make the less you pay percentage wise. We also need less loopholes for the people that can buy lawyers and manipulate their funds to get out of paying what they should. There is no reason companies and the extremely wealthy should be paying an effectively less tax percentage than the diminishing lower middle class.

        • ryathal@sh.itjust.works
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          7 months ago

          It’s not about only billionaires paying, it’s about them not being a magical money source. A higher rate might feel better, but it’s not solving government revenue problems.

          • RogueAozame@programming.dev
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            7 months ago

            It will not suddenly balance the budget but it is funding that will either reduce the deficit, or reduce the burden on poorer people. We can’t fix decades of poor decisions with one good decision, it’s simply a good decision we can make now that will help.

    • sunbeam60@lemmy.one
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      7 months ago

      No, if anything it shows capitalism is working. When you can increase or tighten money supply (ie when you can print and shred money) debt isn’t what you think it is. A state with money issuance powers is not a household.

      I can thoroughly recommend “The Deficit Myth” book by Stephanie Kelton, if you wish to understand modern monetary policy better.

      Or watch the film Finding the Money: https://youtu.be/3HRgsYSLOYw?si=g_CgqMWtC7oBCkGn

      And to answer your specific question, there are countries with very low debt, but that’s usually due to either not being able to “borrow” money (again, borrowing doesn’t always mean what we would think as borrowing when you can issue your own money), being locked to another currency (Denmark is a great example - amazing economy and locked to the euro) or having a large generation of wealth (typically oil). Larger countries can issue debt more easily.

      • psud@aussie.zone
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        7 months ago

        The debt we’re talking about here (as opposed to deficits) is practically all bond sales, isn’t it?

        • volodya_ilich@lemm.ee
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          7 months ago

          Yeah. It’s another form of creation of money. It’s a useful tool for some things, like the central bank being able to control interest rates in the economy, as shown during the recent inflationary episode.

        • sunbeam60@lemmy.one
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          7 months ago

          Yes more or less, that is indeed how the central bank creates money most of the time; the government creates a piece of paper that says “IOU 100k and I’ll pay you 5% interest on it for 20 years and then I’ll return your original 100k to you in 20 years” (that’s a bond), which they sell on the open market, at auction (where the variable element is the interest rate someone is willing to accept). When the central bank wishes to increase the money supply they buy government bonds on the open market (ie from other holders, rarely from the government directly) by materialising money out of thin air.

          When they wish to shrink the money supply they sell their government bonds and destroys the money that they receive from the sale.

        • nyctre@lemmy.world
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          7 months ago

          Denmark has not introduced the euro, following a rejection by referendum in 2000, but the Danish krone is pegged closely to the euro (with the rate 7.46038±2.25%) in ERM II, the EU’s exchange rate mechanism.

          So if euro gets stronger, so does the krone. If euro drops, so does the krone.

        • sunbeam60@lemmy.one
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          7 months ago

          <giggle.gif>

          Not really. They’ve got a version of the euro, called kroners, which allows Danes to believe they have their own currency. They are locked into an exchange rate band (extremely tight) which means the Danish central bank has to follow every decision the ECB takes within minutes). And this makes complete sense, in that it’s a compromise that’s edible by voters (maintaining the illusion that Denmark didn’t adopt the euro) and edible by business (allowing businesses in Denmark to participate fully in the common market).

          And that’s one of the reasons Denmark has such small national debt and runs a government surplus - they can’t really invent new money because it would break the bond with the euro. So the Danish budget is sort of a “household budget” in that in contrast to, say, Sweden, they cannot create money (meaningfully) and the books have to balance (which they do; lots of oil, Novo Nordisk, Maersk, Vestas and a few other big international plays who still pay a majority of their tax in Denmark obviously helps a lot).

    • Takios@discuss.tchncs.de
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      7 months ago

      I’m not the biggest fan of capitalism myself but the existence of debt does not mean it is broken. Debt is a mechanism to allow for solid investments, e.g. building infrastructure or schools that will create a net positive in the (far) future.
      Germany for example has enacted a Schuldenbremse (debt-break) in 2009 and forbids our states to take on new debt and limits the debt taken on the federal level to a minisule percentage of the GDP. Our infrastructure is currently slowly but noticeably crumbling away, bridges are getting closed for heavy traffic and experts say many of them have become irreparable due to missing maintenance and need to be fully rebuild in a few years. The local military barracks are in such a desolate condition that the soldiers need to drive two towns over to shower. We might not take on financial debt, but an infrastructure debt that will demand an even bigger toll on us.

      • dependencyinjection@discuss.tchncs.de
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        7 months ago

        If 90% of the countries in the world are in debt and corporations have more money than god, then clearly the system isn’t ideal.

        $34T is insane for one single country.

        As for infrastructure, proper taxation of corporations would raise more revenue to fix such things. If Amazon is contributing to the breakdown of roads due to all the couriers then they should be paying more tax.

        Look at the water companies in the UK. Paid out their shareholders for decades and did nothing to improve the infrastructure which is now likely to end up with them being nationalised after they’ve looted what they could.

        • volodya_ilich@lemm.ee
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          7 months ago

          I’m as much of a leftist as you are, and I’m sorry if I sound a bit pretentious here but the analysis you’re doing of debt is wrong.

          States generally create their own currency, and generally get indebted (i.e. issue state bonds) in their own currency. You can see how a state that creates its own money doesn’t really need debt to be able to pay for stuff, debt is just a political decision, sometimes misguided by people who don’t really understand it properly, sometimes properly guided by experts.

          A state doesn’t need taxes to fund itself either. If it needs to build roads, it can literally create the currency to hire the workers to extract the resources, plan the roads, and build them. Taxes have many purposes such as removing money from the private sector to prevent or reduce inflation, disincentivizing certain behaviours (for example tobacco taxes), lowering inequality (for example progressive income taxes), or even making people use your currency instead of another (people in the private sector will end up using your currency if they are forced to pay taxes in that currency).

          Taxing companies and rich people is useful because you place the burden of reducing money for inflation purposes on them instead of on the lower income people, and therefore you reduce inequality, so I obviously support at the very least heavy taxation of income and wealth of private individuals and companies, but the state really doesn’t need taxes to fund itself since it creates its own currency and pays in that currency.

          • dependencyinjection@discuss.tchncs.de
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            7 months ago

            So I preface by saying finance isn’t my forte, but I would like to raise a few thoughts I had whilst reading this.

            The first is that the state can just create more currency to pay for things, which to my understanding is not always the case, if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.

            The other point is on the no need for taxes and that we tax the richest and the corporations to remove some of the money supply, clearly this isn’t something that happens as taxes for both of these is rarely raised at the same rate it is for regular people.

            Finally, we have most people, in the western world at least, living literal pay check to pay check whilst the likes of Microsoft have gone from less than $2B to over $3B in a few years. The same can be said for Nvidia and many many more.

            Edit: I guess my point is, just because this is how things work doesn’t mean things shouldn’t change. Clearly something is broken.

            • volodya_ilich@lemm.ee
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              7 months ago

              if you saturate the market with your currency it becomes less valuable and we end up with runaway inflation.

              Notice how I didn’t say that the state should create infinite currency, I’m just saying that the limit isn’t based on taxation. And funnily enough, if you look at basically all inflationary episodes in developed countries over the past century, they’ve happened as a consequence of problems with the supply of goods, not as a consequence of excess currency creation. 2022 inflation? Energy prices and supply chain bottlenecks as a consequence of Ukraine invasion and post-covid effects on production. 1970s inflation? Fuel prices… Really, I encourage you to look up a graph of inflation for, say, the USA, over the past century, to look at the inflation peaks, and to make a Google search “crisis of 19XX”. You’ll find that the inflation was in basically all instances prefaced by a big external event, and not by money creation. Moreover, many of these inflation events happen simultaneously in countries such as the US, UK, Japan and Germany, all of which have different central banks, different currencies, and different rates of currency creation.

              Also, there’s countless examples of vast increases in money supply without inflation. In the decade of 2010-2020, the EU has created VAST amounts of euros with basically no meaningful inflation. You can look up the Euro monetary mass M2 or M3 over the past decade, you’ll find a huge boom, without any effect on inflation. Again, all of this isn’t to say there isn’t a practical limit to how much you should create before destabilizing the economy, just that the limit is absolutely not imposed by how much you’re collecting in taxes, and it depends a lot, for example, on which part of the capitalist boom-bust cycle you are. Another argument for this, is that money creation doesn’t have to be just that, it can imply an increase in the amount of available goods and services. As a stupid example, the US government could open a state-funded iron mine and a refinery, hiring all the employees with newly minted currency, and that would effectively increase the total amount of goods and services in circulation, which can balance out the supposed inflationary effect of the currency creation.

              About taxes not being currently used practically to reduce inequality, I agree, but that’s not a point against the nature of taxation, that’s a point against the current decision of who we’re taxing, what for, and how much. I absolutely agree with ramping up the taxes of huge multinational companies and their directives. It’s just, if we see taxes not as a necessity to fund the state’s activity, but as a necessary tool to reallocate money in the economy from rich people to poor people and to create a welfare state and a great infrastructure, it’s much easier to explain why Amazon should pay 90% taxes and your average low-paid worker only 10%.

              As for your last point with inequality between companies’ income and that of people, I couldn’t agree more, I’m a hardcore leftist and I want to reduce wealth inequality extremely, again, I’m not arguing for lowering taxes “since they’re not necessary”, I’m arguing for reallocating the taxes in a much more progressive way to disincentivize certain behaviors such as speculation, and to reduce inequality between the richest and the poorest.

              Thanks for the civilized discussion, it’s good to be able to actually discuss this stuff.

              • dependencyinjection@discuss.tchncs.de
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                7 months ago

                No. Thank you for giving me some food for thought and areas to research to further my understanding, rather than talking down to me due to my lack of knowledge on the macro economics of the world.

                I really do appreciate you taking the time.

                • volodya_ilich@lemm.ee
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                  7 months ago

                  To be fair, it’s not you lacking knowledge, it’s a fundamental problem in the field of economics, which because of political reasons, has been dominated for the past decades by neoliberalism. The problem is that neoliberalism reaches conclusions that have been falsified by experimental data in several occasions, but since it serves the ideology of the elites, it’s peddled constantly in media by prominent “economist” propagandists. If you’re interested into the topic and this modern, more empirical vision of the economy, the field is called “Modern Monetary Theory” or MMT. There’s a documentary released recently about the basics of it, applied to the US, called “Finding The Money”, and I can also recommend the YouTube channel called “Unlearning Economics”, which isn’t MMT per se but it’s very keen on treating economics through empyrism.

              • AngryCommieKender@lemmy.world
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                7 months ago

                You missed the biggest flaw in the “money creation = inflation” argument. That would be Japan. They’ve been printing money full tilt for the last couple decades, and are just barely staving off deflation

            • pearable@lemmy.ml
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              7 months ago

              That sort of thing can happen in extreme situations. Zimbabwe and Weimar Germany are the most prominent examples. Both examples involved not having enough stuff. When there aren’t enough necessary goods to buy and people have plenty of money you’re going to get inflation. Using the right combo of subsidies, government run production, purchase quantity limits, reserves, vouchers, and price fixing you can ensure the supply is stable and eliminate inflation even if there’s lots of money.

              That’s true. That happens because people are stuck in the narrative of the government needing a balanced budget, just like a household. It also happens because the owners and the corpos use all their money and power to ensure workers pay taxes and thus decrease worker money and power.

              Yeah, if the population was educated on MMT the ability to bring corpos to heel would be significantly increased. People arguing for it are fundamentally arguing for a change in how we think about money.

      • toddestan@lemm.ee
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        7 months ago

        Well, that’s a misleading title. All the countries in their list have some debt, just less than most.

        All countries carry some debt, because they need to show a history of reliably making payments on that debt in case they need to borrow money in the future for whatever reason. Not all countries, however, run massive deficits every year.

        • Midnight Wolf@lemmy.world
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          7 months ago

          Imitation is illegal… Smh why does nobody just print real money? Am I the only one seeing this loophole?!

          • volodya_ilich@lemm.ee
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            7 months ago

            It’s not even about reputation, it’s mostly about taxes. You enforce the private sector using the state’s monopoly of violence to pay tributes in a currency that you create. This way, when there are transactions in the private sector, the main currency that people will want to use (provided it’s stable enough) is the one that lets them pay their taxes later. You can’t pay taxes with dollars in Hungary, which makes Hungarian people use Hungarian currency instead of Chinese Yuan even if the Chinese Yuan is a much stronger currency.

            And yes, the state having the monopoly of violence and enforcing taxes is a good thing, before anyone accuses me of being an anarchocapitalist.

    • qjkxbmwvz@startrek.website
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      7 months ago

      …except that it used to be that your ability to secure a loan was based on where you went to school, how firm your handshake was, and if you happened to have the right skin color and sex organs.

      The current system certainly isn’t perfect; and if you’re denied a loan you have a legal right (in the US) to know the reason.

      There are systemic issues, to be sure. But the nominal goal is absolutely better than what we used to have.

      • Catoblepas@lemmy.blahaj.zone
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        7 months ago

        We can’t ignore that there are other ways of doing it besides credit scores or overt racism. Some countries have no credit scores at all and just base loan eligibility on your salary and employment history.

        • ObjectivityIncarnate@lemmy.world
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          7 months ago

          And how exactly is guessing your credit worthiness based on those factors a better system than literally keeping track of what happened each previous time money was lent to you, when it comes to making a decision on lending money to you?

          This is like arguing it’s a better idea to select NBA players by their height, than by their performance in high school and college basketball games.

          • Catoblepas@lemmy.blahaj.zone
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            Sorry, I’m not sure how to answer “how is measuring your credit worthiness based on your income a good way to determine how much to lend you.” I would think it’s pretty obvious that your capacity to repay a loan is dependent on your current income, not how many loans and credit cards you’ve had active in the past.

            • ObjectivityIncarnate@lemmy.world
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              7 months ago

              1 in 4 households earning over $100,000 a year live paycheck to paycheck–not because they can’t make ends meet, but because their money management sucks. A high income has very little relationship with responsible borrowing, despite what many would assume.

              • Catoblepas@lemmy.blahaj.zone
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                7 months ago

                If you stop paying your car or home loan it gets repossessed, people with bad money management still have incentives to pay those on time.

      • LaunchesKayaks@lemmy.world
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        7 months ago

        My mom should have amazing credit, but she doesn’t. She does literally everything right.

        Meanwhile I have really good credit and have no idea why.

        It’s just made up shit and we should find a better system.

        • qjkxbmwvz@startrek.website
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          7 months ago

          I’d definitely recommend getting a credit report (not from the websites that advertise with an insane jingle, but from the actual credit bureaus — you’re entitled to a free report). Mine had debt from a relative with a similar name; I was able to get that removed. They will also tell you in more detail what goes in to calculating it.

          I agree that it’s not perfect, and often very opaque, but you should be able to get some understanding of why she doesn’t have good credit.

        • sunbeam60@lemmy.one
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          7 months ago

          Does your mom have debt that she pays on time? Is her “doing everything right” visible to credit scoring agencies and aligned what statistic says about good borrowing customers?

          Credit score doesn’t mean “runs a good personal economy” it means “likely to pay their loans on time, consistently, based on statistics that are observable”.

        • Fades@lemmy.world
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          7 months ago

          and have no idea why

          Just because you refuse to learn doesn’t mean it’s magic. It is very simple to understand why exactly you have the credit score you do. Maybe mommy isn’t being entirely truthful with you.

        • JasonDJ@lemmy.zip
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          7 months ago

          Most people who think they understand how credit scores work…don’t understand how credit scores work.

          The biggest things are loan-to-limit, payment history, and average age of accounts.

          Loan-to-limit is easily achieved by keeping balances below 50%, and ideally below 30%. It’s also helped tremendously by not carrying a revolving balance (paying the statement balance in full each month) and not closing idle cards.

          Payment history is of course helped by making payments on time.

          And AAoA is probably the easiest. Just don’t close cards. Call and “downgrade” a card if it isn’t worth the annual fee. If there’s no annual fee, there’s no reason to close a card.

          Just make sure you use it every now and then and pay it off. I sock-drawered one of my oldest cards a long time ago and it just closed last month from being idle, and that took a hit to my score (high limit gone and it’s no longer incrementing time in my AAoA).

          It’s also worth mentioning that credit scores don’t matter until you are looking for credit. Credit cards are probably the easiest way to build credit, as long as they are used properly. But they’ll give a basic card to any schmuck. Where it really matters is getting mortgages and larger loans like cars. That’s where having a good score matters. And also better cards that earn more points/miles/cashback and have other fringe benefits.

    • ObjectivityIncarnate@lemmy.world
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      7 months ago

      Only people who are bad credit risks ever come up with this take, lmao.

      The sole function of credit scores is to benefit people who are reliably ‘good for it’ when they borrow money. Without them, everyone is treated as just as high a risk as the worst borrowers who are least likely to pay back their debts, and you gain no benefit from reliably paying back your debts. But with them, your good borrowing is kept track of, and good reputation means lenders trust you more to pay your debts back, so they’re willing to lend more, and they are willing to charge less interest.

      Removing credit scores changes nothing for bad borrowers, and hurts good borrowers.

      • volodya_ilich@lemm.ee
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        7 months ago

        The thing is you’re forgetting who are good borrowers and who are bad borrowers. A person with a low income with a precarious job will be a very bad borrower, and imposing a higher interest rate on them on top of that is just the final nail in the coffin. We generally believe universal healthcare is good, and we don’t want to discriminate “good health” and “bad health” people and make unhealthy people pay more, do we?

        • ObjectivityIncarnate@lemmy.world
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          7 months ago

          imposing a higher interest rate on them on top of that is just the final nail in the coffin.

          That’s the only way to justify loaning to people like that at all, given how much more often they default (and the lender never gets repaid at all). If lenders were forced to give the same interest rate to everyone, that would cause them not to lend to “A person with a low income with a precarious job” at all.

          • volodya_ilich@lemm.ee
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            7 months ago

            If the lenders operate with the purpose of maximizing profit, then yeah, it makes sense not to loan money to people in precarious situations except at high interest rates, that’s my whole point: that’s evil, the profit motive leads to evil decisions. Let’s have public banks instead, where interest rates for loans are equalised, in the same way that every taxpayer gets identical access to healthcare regardless of how much they contribute through their income.

      • candybrie@lemmy.world
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        7 months ago

        You’re discounting the people who have always lived within their means and so never took on debt. They also don’t have good credit. They’ve never missed a payment. They’re good for the money. But they don’t have a history showing that because they’ve never needed that.

        • ObjectivityIncarnate@lemmy.world
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          7 months ago

          You’re discounting the people who have always lived within their means and so never took on debt.

          No I’m not. Those people are unknown quantities, and so also suffer if credit scores go away, because bad borrowers are worse than first-time borrowers, so without credit scores, first-timers will be treated worse.

          • candybrie@lemmy.world
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            7 months ago

            I’m saying people who don’t play this credit game but otherwise are good financially also think it’s dumb. Not just bad risks.

    • karashta@lemm.ee
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      7 months ago

      This.

      More people need to understand that the debt of a sovereign nation isn’t analogous to that of a household.

      Public sector debt is private sector surplus.

      • DragonTypeWyvern@midwest.social
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        7 months ago

        The current American debt is more than the current GDP. That would be fine, if we were paying it down, but it’s growing faster than ever.

        It would also be fine if it was healthy debt. Debt taken to improve infrastructure in meaningful ways, improve education, shit, even a war debt to create an old school tributary state (economically speaking).

        And it would all be fine if everyone in the room were adults, and there wasn’t a significant portion of America actively and willfully trying to cause governmental collapse.

        The American citizen, on average, will spend $37,000 in the next decade to pay the interest on that debt, $12.4 trillion in total.

        All without universal healthcare mind you. Or, on average, a reasonable retirement age.

        You need to start asking yourself whether the people who keep assuring you not to worry your pretty little head about the APR on your loans, and they are ultimately partly your loans as a citizen, are actually acting in your interest.

        • volodya_ilich@lemm.ee
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          7 months ago

          Your comment stems from a fundamental misunderstanding of public institutions and how money works.

          It doesn’t matter that the debt is higher than the GDP if it’s debt in the currency that the state creates. Japan has a debt of 250% of the GDP and it’s always going to pay for it. Why? Because it’s in Yen, and the Japanese public sector is the ONLY institution in the world capable of creating Yen. If they wanted, the Japanese central bank could quite literally perform 100 keystrokes on a keyboard, and repay all debt early tomorrow, at a cost of exactly 0 yen to the taxpayer.

          Taxes aren’t the way a state funds itself. Again, the state creates its own currency, why would it need tax collection to get that currency if it can create it at will at a keyboard’s stroke? Taxes serve many purposes, such as forcing people to use your currency in the private sector (they will need that currency to pay for the taxes so it’s the one they will use), such as disincentivizing certain behaviours (tax on tobacco for example), or such as reducing inequality (progressive income taxes), or also importantly, removing money from the private sector to reduce or prevent inflation. But the one thing taxes don’t do is funding the state budget, since the state’s budget is unlimited in theory. There are practical limits, but availability of currency really isn’t one of them.

          The American citizen won’t spend a single dollar paying back state debt, in fact it’s exactly the opposite. The state creates the currency with which it pays back the debt, and it’s private citizens and corporations who the state owes the interest rate to. If you buy a bond for $1000 at an interest rate or 3%, next year you’ll have $1030. The state, through debt, literally creates money for the private sector. It makes people and companies wealthier. Taxes make people and companies poorer, but taxes and debt are completely unrelated to one another, since the state really doesn’t need taxes to pay the debt.

          I fully agree with your analysis of the poor usage of the state budget and people not getting the welfare state they deserve by right, but that’s not something that has to do with debt, it has to do with the government representatives not acting for the benefit of the majority but a select elite of capitalist owners. Debt is purely a financial tool that serves purposes such as creating money, or controlling the interest rates of the country so that people and companies will take more or fewer loans, which has an effect in the economy.

      • Sockenklaus@sh.itjust.works
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        7 months ago

        Public sector debt is private sector surplus.

        Yes! This is the very essence of our monetary system that nobody seems to understand.

        • karashta@lemm.ee
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          The other person who responded to me made a very all written post but it gets a core assumption completely wrong.

          They seemed to think that tax revenue in some way has to happen for spending to happen. That’s why they think GDP has anything to do with our ability to service debt. But the federal government creates money ex nihilo.

          Money has to be created before it can be destroyed through taxation. Spending and back stopping creation of money by private banks through the reserve system comes first. You can’t destroy something you haven’t created.

          It’s sad, really. Economists and politicians have blinded everyone with what I think of as “the money delusion”.

          It doesn’t matter if the money can be “gathered up” to be spent on things we need. We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.

          The national “debt” is a misnomer. That’s the amount of dollars left in circulation that have not been destroyed through taxation, as well as the “dollars” that pay interest which we call bonds.

          I’m glad to see at least a handful of other people who understand. Fight the good fight, fellow human.

          • Sockenklaus@sh.itjust.works
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            7 months ago

            They seemed to think that tax revenue in some way has to happen for spending to happen.

            Noo!

            But the federal government creates money ex nihilo.

            Yes!

            Money has to be created before it can be destroyed through taxation.

            Yes!!

            We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.

            Yes, yes and yes!! ❤️

            Thanks for your concise explanation of MMT! I wouldn’t be able to phrase it this well. ❤️

    • CableMonster@lemmy.ml
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      7 months ago

      I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.

      • Sockenklaus@sh.itjust.works
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        7 months ago

        No, that is not true. That states sell bonds is a self-imposed rule.

        As long as a state collects its taxes in its own currency there will be demand for that currency.

        • CableMonster@lemmy.ml
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          What happens when they run out of people to sell bonds to and they run out of money to tax?

          • Sockenklaus@sh.itjust.works
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            Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).

            Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.

              • Sockenklaus@sh.itjust.works
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                7 months ago

                Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.

                • CableMonster@lemmy.ml
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                  7 months ago

                  No they cant, that is illegal. You could say they will change the law so that they can do that, but that is not possible (in america) at this time.

      • assassinatedbyCIA@lemmy.world
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        7 months ago

        The economist ewww. The limits to how much money you can print is defined by the productive capacity of your country. If you print more money to increase productive capacity then it’s generally not a problem. The debt is simply an accounting fiction at that point.

  • LEDZeppelin@lemmy.world
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    7 months ago

    Tell me you don’t understand how credit score works without telling me you don’t understand how credit score works

  • Maggoty@lemmy.world
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    7 months ago

    Credit scores require you to get some kind of debt. This is because it’s not a score of your financial health. It’s a score of how reliably you repay your debt.

  • Semi-Hemi-Lemmygod@lemmy.world
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    7 months ago

    Terry Pratchett’s “Making Money” taught me enough economics to know that individual debt and national debt are two different things.