What Precisely Is Debt

I will make this short, not only because I'm on vacation, but because I genuinely believe in keeping this important lesson simple, because it is that; simple.

Debt for most of our everyday use is used to purchase large ticket items like houses or cars that we do not have the great sum of cash for, but can instead borrow the money and pay it back over time with interest.

Another form of "debt" that is in the daily use of the average person is short term debt, such as credit cards. This form of debt is not that we don't have the money now, it's just that it's easier to carry a credit or debit card as opposed to cash. This "tab" is then paid up monthly (unless of course you're like 70% of the American public and just decide to let it build up into a $50,000 credit card balance).

However, "debt" is also measured from a macro-economic perspective where we add up all the debts of corporations, people, and governments. The relevancy of this "total debt" figure is not its use as in mortgage debt or credit card debt, but rather a testament to the laziness of a nation.

Let me say that again;

"The total debt of a nation, including personal, corporate and governmental debt, is a testament or measure of the laziness of a nation."

The reason why is this,

Debt is the difference between what the people of a nation consume versus what they produce.

You see, we (or any other nation) produce a certain amount of production every year. We call this GDP. We produce GDP because that is what we not only like to consume, but trade with one another. So I go and teach dance classes and sell books, so that I might raise the money to buy food and pay for martini's.

However, if I'm a spoiled suburbanite princess, or perhaps a socialist president who wants to blow $3 trillion on social programs, we like to consume MORE than what we produce.

This results in a difference or "deficit" between what we produce and what we consume.

We finance this deficit by borrow money year after year after year....^nth power after year after year.

Ultimately these deficits accumulate into "debt"

So in short, our desire to be greedy and consume more than we produce, turns into the physical manifestation of debt. ie-Debt is the real life manifestation of human laziness.

Now, to measure how lazy a nation is we should compare our total laziness (debt) against our total production. Thankfully some nice men and women at Bloomberg have done so already;



It looks like, assuming Americans keep spending more than they make, we'll consume 4 times they amount we've produced, and that is frankly criminally greedy. No different than the bankers and scumbuckets who caused the financial crisis. But where is all this debt coming from?

You see, if we keep going along promising ourselves free food, free clothing, free shelter, free health care treating them as if they were "rights" and not what they really are (commodities) since they are "rights" nobody is going to work or "produce" for them. This not only lowers our production, but since we've (and when I say "we've" I really mean the socialists in congress and the socialist Barack Obama) promised ourselves free health care and unicorns and cars and ice cream, we will have to incur more debt relative to our production.

The long and short end of this lesson is a very simple, childish one, which most American adults seem to have a real hard time understanding;

If nobody works and everything is "paid for" nothing will be produced and even though you think you're "entitled" to these "rights," the reality is that of Soviet Russia;

Empty food shelves
Bread lines
And no, I'm sorry little Taylor, you don't get your I-Pod for Christmas. Hear some government issued coal (green coal of course).