Bitcoin Forum

We hear this a lot with the government borrowing and the unfunded entitlements.

Here is why it is not directly relevant:

Since money have no intrinsic value, the size of the debt in total is not equal to actual goods or services produced and consumed. At any time interval, what can be consumed is the same as what is produced (plus/minus change of goods in "store"). What people in some future time period (say 2030 - 2040) will be able to consume, equals what humanity in that time period is able to produce.

So, what they are able to produce, will depend on the volume and structure of the capital that exists. That capital (factories, machinery, tools, raw materials) can not be created in an instant, it has to be built during the decennia before. So I propose that that future generation's wealth will depend on their capacity to produce and on the capital structure they inherit. It is the same for us at this time, we take great advantage from what has been built in the past.

The problem with what is going on now with the debt, is not that unborn people will have to pay it through taxes in the future. The problem is that the debt, the money printing, the cronyism and the spoils distort the economy severely by canceling the price signals that should govern the spending and capital building, the interest rate being the most important price signal. The capital being built now does not have the right size and structure to best serve the future. And of course the prospect of a painful correction, and a few other things.

"The problem with what is going on now with the debt, is not that unborn people will have to pay it through taxes in the future. The problem is that the debt, the money printing, the cronyism and the spoils distort the economy severely by canceling the price signals that should govern the spending and capital building, the interest rate being the most important price signal. The capital being built now does not have the right size and structure to best serve the future. And of course the prospect of a painful correction, and a few other things."

I completely agree with the quoted paragraph.


"Since money have no intrinsic value, the size of the debt in total is not equal to actual goods or services produced and consumed."
 This line seems problematic to me. Lacking intrinsic value, money is "backed" by everything that can be produced and consumed. Isn't the conclusion then that debt is always exactly equal to the sum of actual goods and services produced and consumed??

Either way thanks for sharing your thoughts on this.

I don't want to give up the "intrinsic value" concept. Think of it as value for direct use. You can not use modern money (except gold) for anything directly. Hence no intrinsic value. Only money value or value for indirect exchange. Consumer goods for example have direct use value. It is not about backing. It has been discussed in depth. I think that the elevated economic discourse going on here at bitcointalk deserves to have a good nomenclature.  :)