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View Diary: "We" Don't Owe $16 Trillion; and You Don't Owe $50,000 (31 comments)

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  •  Hey skeptics, try thinking of it like this (0+ / 0-)

    There are two types of debts. Govt debts and private debts

    Private debts are in the form of mortgages, credit cards, student loans etc etc and are owed to banks or financial institutions.  We pay those each month out of our incomes and we are always working to pay those off. We eventually want them to be zero so we can use all our income to spend in present period and not be paying off "prior period" consumption. So if I have a mortgage or credit card debt of $100,000 I need to use present income to pay it down. It is a liability...right?

    So what are govt debts?  Govt debts are in the form of T Bills and Govt bonds.  If I have a TBill or bond of $100,000 what is it costing me?  Nothing. In fact it is PAYING me!  It is adding to my income and I can use it to pay back my mortgage debt.

    Govt debt is not just unlike private debt it is opposite.  Measles is unlike Chicken Pox but both are illnesses. Health is not just unlike measles it is the opposite of measles, it is a measles free existence.

    On my personal balance sheet if I have mortgage debt it is in the LIABILITY column, if I have govt debt it is in the ASSET column.

    Hope that helps

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