One way to look at this is in focusing on what purpose money serves.
Suppose you do something for someone, and that person pays you a $1 bill. What does it mean, to have that $1 bill in your hands? After all, concretely speaking, it doesn’t serve for much. It’s a small piece of generic printed paper, so you can use it for same general purpose any piece of paper with something printed on it serves.
However, it has attached to a formal “possibility of” a future something, as you can eventually exchange it for something else, be it a good or a service. Hence, at its core that $1 bill is a contract, or more specifically, a promise.
Hence, when you do something and receive $1, you’re exchanging that work for a promise. And, conversely, someone else is promising you a future reward in exchange for you doing something now. And, evidently, such promises themselves can be exchanged, such as when one exchanges one country’s currency for another’s.
Notice then that debt, in aggregate, works in a very similar way. When a credit agencies you owe money to negotiates that debt of yours with another, they’re exchanging promises between themselves, tied to something eventually happening, namely, you providing them many $1 promise bills in exchange for a return of the big promise letter with your signature one of them is carrying. And thus, similarly, at higher layers, until the much higher one of debts hold by countries, which also are exchanged around.
Hence, at that very high level the movement of debts around is a form of money. Rather than moving around packs of first-order promises, aka, stored currency, they move around wide blocks of second or third-order promises, tied to their whole countries doing this or that in the negotiated time frame.
This is why holding countries to having a positive cash flow doesn’t make much sense. I mean, it does make some sense, in that handing out blocks of “small promises” simplifies many things. But it also makes other movements more complex, as using debt, that is, “big promises”, can be a very effective tool to move things faster when done carefully.
The “fun” part of our financial system is the usury—the idea that if I do something for you today, once, and then wait for a sufficiently long time, it afterwards makes you obligated to keep doing things for me effectively forever (if I only ask you to pay back the interest, not the principal).
Why is it considered a smart idea to be the one who needs to pay back the favors forever, instead of the one who collects the favors forever?
If you were an immortal vampire, would you prefer to be one who keeps paying 30% of his salary as a credit card debt, for eternity, or the one who is early retired?
The official theory is that the debt allows you to finance smart things that make you so much better off that having to return favors forever is definitely worth it. Instead, I suspect than most of the money is typically wasted or stolen, and does not make a difference in long term… except for the debt that the next generations inherit.
One way to look at this is in focusing on what purpose money serves.
Suppose you do something for someone, and that person pays you a $1 bill. What does it mean, to have that $1 bill in your hands? After all, concretely speaking, it doesn’t serve for much. It’s a small piece of generic printed paper, so you can use it for same general purpose any piece of paper with something printed on it serves.
However, it has attached to a formal “possibility of” a future something, as you can eventually exchange it for something else, be it a good or a service. Hence, at its core that $1 bill is a contract, or more specifically, a promise.
Hence, when you do something and receive $1, you’re exchanging that work for a promise. And, conversely, someone else is promising you a future reward in exchange for you doing something now. And, evidently, such promises themselves can be exchanged, such as when one exchanges one country’s currency for another’s.
Notice then that debt, in aggregate, works in a very similar way. When a credit agencies you owe money to negotiates that debt of yours with another, they’re exchanging promises between themselves, tied to something eventually happening, namely, you providing them many $1 promise bills in exchange for a return of the big promise letter with your signature one of them is carrying. And thus, similarly, at higher layers, until the much higher one of debts hold by countries, which also are exchanged around.
Hence, at that very high level the movement of debts around is a form of money. Rather than moving around packs of first-order promises, aka, stored currency, they move around wide blocks of second or third-order promises, tied to their whole countries doing this or that in the negotiated time frame.
This is why holding countries to having a positive cash flow doesn’t make much sense. I mean, it does make some sense, in that handing out blocks of “small promises” simplifies many things. But it also makes other movements more complex, as using debt, that is, “big promises”, can be a very effective tool to move things faster when done carefully.
The “fun” part of our financial system is the usury—the idea that if I do something for you today, once, and then wait for a sufficiently long time, it afterwards makes you obligated to keep doing things for me effectively forever (if I only ask you to pay back the interest, not the principal).
Why is it considered a smart idea to be the one who needs to pay back the favors forever, instead of the one who collects the favors forever?
If you were an immortal vampire, would you prefer to be one who keeps paying 30% of his salary as a credit card debt, for eternity, or the one who is early retired?
The official theory is that the debt allows you to finance smart things that make you so much better off that having to return favors forever is definitely worth it. Instead, I suspect than most of the money is typically wasted or stolen, and does not make a difference in long term… except for the debt that the next generations inherit.