Thursday, August 04, 2011

What Is Borrowing?

It's just taking profits and opportunities from tomorrow. In reading that little bit from Der Spiegel I posted yesterday, it hit me harder than ever - "They need a new economic stimulus package in order to fight the high levels of unemployment" just means solving today's unemployment problem with still more unemployment tomorrow.

Personal example: When you borrow money buy a house, it may be a wise investment, but it still represents a commitment of future funds that could have been used doing something else. The money I pay on my mortgage isn't available to use for education or charity or even the hallowed "transportation infrastructure improvement" like replacing my car.

There's nothing magic in any of this. It's all just basic arithmetic. If you spend it today, you won't have it tomorrow. If you commit tomorrow's money today, you won't have it tomorrow, either.


Kevin said...

But, but, we'll {grow|inflate|tax} our way out of it eventually! {Deficits|huge debts|unfunded liabilities} don't really matter in the long run because the government can {set interest rates|print money|tax the rich} and fix everything.

Jeff Burton said...

Math is hard.

K T Cat said...

Forget the math. Let's just let Ben Bernanke print dollars and hand them out.