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Politics : Formerly About Advanced Micro Devices

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To: Taro who wrote (316645)	12/20/2006 12:17:16 PM
From: RetiredNow	Read Replies (1) of 1586065

I understand what you are saying, but the US gov't and people do not benefit when we issue debt to spend more money. If we issued debt to buy an asset during a period of time when the dollar was depreciating, then I'd say it would be a very good deal for our gov't and for the American people. Thought experiment. We issue $100 debt to buy land. We now have $100 worth of land and $100 worth of debt and networth equals $0. The dollar depreciates by 25%. We now have $100 worth of land and $75 worth of debt, and $25 net worth. The bondholder just lost out due to the depreciating dollar, but we win. That's your scenario and I understand it. Now here's reality. We issued $100 of bonds to spend money into the ether. We have a negative networth of -$100. The dollar depreciates by 25%. The bond holders lose because now their bonds are worth $75, but we still have a negative networth of -$75. Issuing long term debt to spend the money on current expenses almost always a bad idea and that is what this country is doing. $9 trillion and counting.

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