bulloughclan said:
Why limit ourselves with what we have tangible right now, if we can borrow against our perceived tangible present, and future, value?
Extra money means either
1> More funding for government programs with borrowed money
2> Money to pay for government programs with borrowed money, while the populous retains more private income for the private sector of the economy.
Both of these options mean, in essence, the same thing. They mean that we have X amount of dollars of wealth and investment that we can use to be ahead of competing economies.
Simple situations:
Company A increases size as revenues allow. They borrow nothing and only pay for training and new machinery when present profit allows.
Company B, on the other hand, sets out an estimate based on past performance and realizes that new training and machinery can increase profits. Company B borrows money to train and revamp old machinery.
After time Company B continues at it's previous rate with no debt. Company B's training and machinery allow it to be more efficient, lowering overhead and capturing more of the market share. B is in debt for a number of years, but has been passing A in sales and production for quite some time leaving their profits in the dust.
Now, at this point B has a better trained workforce, better machines, and A does not have the revenues to buy the required machinery to catch B.
So when does the debt come into play? Well B isn't interested in paying off the debt. This is a fruitless idea that does nothing for the business. Instead, B pays down the debt but continues to revolve an amount of debt that it's profits, from the borrowed investments, can sustain.
In economies this works the same way. If the US and China's economies are neck and neck. It would behoove either country to borrow money as an investment in military, research, training, security, etc. to make a more efficient robust economy. This means debt, but it means passing the other guy. Revolving that debt leaves you X amount of dollars of investment ahead of the competition.
Revolving a debt also does on other thing (that I'm sure you thought of already while reading this.) It allows for a safety net.
An economy based on the gold standard is what it is. Things go bad and you have to suffer through them with everyone else. In an economy based on virtual perceived value and comaritive currency, the bad times can be offset with borrowed money that can 1> aid revenues that are not coming in 2> make investments that will expedite the return to a good time.
Again, paying the debt off accompolishes nothing except giving us more money to borrow (which those that support paying it off seem to be inherently against). Going to the gold standard makes us company A while company B buys up machinery and training to out do our operation.
The key is REVOLVING a debt that is MODERATE compared to our economy with INTELLIGENT NON-WASTEFUL investments in our country.
