[Gllug] OT: Debt (was: [Long] Down-under response)

[John Edwards]

On Thu, Mar 04, 2010 at 10:36:44AM +0000, Peter Childs wrote:
> On 4 March 2010 07:43, Nix <nix at esperi.org.uk> wrote:
>> On 4 Mar 2010, Christopher Hunter uttered the following:
>>
>>> On Wed, 2010-03-03 at 22:28 +0000, Nix wrote:
>>>
>>>> Rubbish. The debts will inflate away and be grown away.
>>>
>>> Not this time.  There's nowhere for the hole to disappear to, this time.
>>
>> What? Inflation and growth can dispose of *any* debt, given time, though
>> if it goes too far your currency implodes into hyperinflation (which
>> also disposes of the debt, although as it also disposes of your entire
>> nation's savings it tends to do your political prospects no good at
>> all).
>>
>> We are very, very far from hyperinflation right now.
> 
> Does that work with personal debt too?

Yes.

Inflation reduces the value of the currency and hence the value
of the debt. But it erodes both debt and savings, and has strong
feedback effects.

Growth on the personal level would be an increase in income.

There are other ways of reducing debt, both national and personal
(or even football club), such as the sale of assets (eg banks)
and reduction of costs.

A debt larger than income is sustainable as long as there is
sufficient assets and the debt is able to be steadily paid off.
A new mortage is many times higher than your salary.


-- 
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|    John Edwards   Email: john at cornerstonelinux.co.uk    |
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