tag:blogger.com,1999:blog-22301740.post8242341523997693778..comments2024-03-26T09:49:07.212-07:00Comments on The Scratching Post: Debt is DumbK T Cathttp://www.blogger.com/profile/10259428595745509790noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-22301740.post-65018213862307681012008-03-26T14:27:00.000-07:002008-03-26T14:27:00.000-07:00Sen. Tom Coburn (R-Okla.) gave a speech recently a...Sen. Tom Coburn (R-Okla.) gave a speech recently about debt. In turn, I blogged about it in this <STRONG><A HREF="http://bobmccarty.com/2008/03/26/%e2%80%98earmarks-the-gateway-drug-for-overspending%e2%80%99/" REL="nofollow">post</A></STRONG> today. I think you'll find it interesting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-22301740.post-84033428733397581392008-03-21T19:16:00.000-07:002008-03-21T19:16:00.000-07:00Totally agree with you dude. But its actually wor...Totally agree with you dude. But its actually worse than you point out. We're $9 trillion in debt (you had the correction number of zeros) and that's not including any measure of the commitment the government has made regarding medicare, medicaid, and social security. A GAO estimate puts that tab at $40 trillion in present dollars. Holy #^%#!!!. That estimate is derived using the accounting practices of every business in the U.S. that has a defined benefit plan. Of course the federal government doesn't hold itself to the same standard. Not sure any way out of the mess but to quite promising social security and medicare to those, say 40 years old and younger and payout everyone else. <BR/><BR/>ohioan@heart - What factor does risk play in your analysis?Unknownhttps://www.blogger.com/profile/14596185507424877807noreply@blogger.comtag:blogger.com,1999:blog-22301740.post-68997389479944941732008-03-20T18:22:00.000-07:002008-03-20T18:22:00.000-07:00KT - Debt is not, in and of itself, dumb. Misuse ...KT - Debt is not, in and of itself, dumb. Misuse of debt and not understanding how and when debt can and should be used is dumb. <BR/><BR/>Two examples make the point.<BR/>Example 1. You can buy a home that retails at $200,000, with money payments at a fixed mortage rate of $1,200/month. If you are currently paying $1,500 in rent, then the debt is a GREAT investment. It doesn't matter if the house goes up down or sideways in value. You acquired debt. Lots of debt. But it saved you money in your cash flow. It is smart debt.<BR/><BR/>Example 2: Same example, but you are currently paying $600 in rent and have other monthly expenses auch that the additional $600 is not to be found. This is dumb debt.<BR/><BR/>Additionally, in times of high inflation, debt allows one to buy current goods with future cheaper dollars (at least partially). This can be smart or dumb debt.Ohioan@Hearthttps://www.blogger.com/profile/08650494620853971183noreply@blogger.com