Debt

[tongodeon]

One of the smartest things that I overheard the weekend I went back to Arizona came from my youngest brother. He pointed out that a big problem with modern economies is debt and financing when it runs amok. (To be clear, in this post I am not paraphrasing what he was saying, although he gave me some food for thought and I'm running with it

Comments

[mister_borogove]

Good food for thought. Minor grammar picks - para 3, "Houses ... became worth three times as expensive". para 6, "It lets poor people with big ideas but no capital a chance to compete".

[flwyd]

Education debt can become a social problem, too. Most doctors graduate with a lot of medical school debt. This leads to higher prices for medical service and makes it very hard to convince doctors to work in high-need but payment-challenged areas like rural towns and impoverished urban areas. It might be cheaper overall to have taxpayers fund medical school for any doctor who agrees to work for X years in basic care.

[talldean]

A friend just got medical school paid for because he wanted to move to ruralish Alaska... and Alaska pays doctors willing to move to rural Alaska pretty well.

The bigger problem is attracting competent doctors to underserved specialties. A child psychiatrist is 7-9 years of education after college, still requires you make it through things like a surgical rotation and gross anatomy, and pays under $100k/year after you take your malpractice insurance out. There's a reason most orthopedic doctors are slick as hell.

[talldean]

"Growth" and "sustainable" are two words that rarely go together in the American system of finance. The Islamic system of debt really covers this better than the western world.

Every dollar of loaned money must be backed by a dollar of real money. Or, if I want to buy a house, someone has to actually back it 100% with assets, not the 5% or whatever the US banking system has to have in the bank.

[swingland]

i like this idea. slower growth but possibly a more stable growth.

and this would work how?

[drieuxster]

I think your core confusion here is with what Money Is, and it is NOT currency.

Cash is what you have when you do not have actual Money.

Remember, when a person buys that $500K house, the loan is based upon the reality that the house is actually worth the $500K, not that it is a Pile of Currency that is $500K. But that there is a religious hope that this is a price that is approximated by the Mystico-Religious Belief in the ability of the market to price things.

Simply shifting to some hope of a Gold Standard is not going to change the fundamental nature of actual Money Creation.

Re: and this would work how?

[talldean]

As far as "and this would work how?", it already works for a small but significant portion of the world.

I can't really quite parse what you're trying to say, though. If you're going to use nonstandard definitions of words, it helps to be clear?

http://dictionary.reference.com/browse/cash
1. money in the form of coins or banknotes, esp. that issued by a government.

[catbear]

Free markets are like evolution. There are a lot of fuckups, a lot of people get hurt, and efficiency is nowhere near 100%. But all niches get explored and taken advantage of, and sometimes that exploration -- which might never have been attempted by a sane central organizing committee -- reveals new and exciting frontiers.

[captainchimp]

One of the big issues with finance, specifically, as a part of a free market economy is that it ultimately deals with time, with moving resources back and forth in time

good write up...

[drieuxster]

One of the problems of course is when the process ceases to be about making managable risk assessments.

And simply becomes one more fancy form of Liar's Poker.