Wednesday, 29 April 2015

Zero is Magic

I wrote before about how public debt and deficit are not problems and in fact we should probably be making a point of never paying back our public debts. If you can borrow at 3% and invest at 10% you would have to be a moron to ever pay down the debts you are accumulating.

So I'm pretty sure that grade eight math tells us not to pay down our public debt, but what about magicthink? Well, you see, zero is magic. Zero borrowing, and zero accumulation of savings is just obviously the right place to be. I mean, the difference between one dollar in debt, versus balance, versus one dollar of savings is a dollar and a dollar, but doesn't something magical happen at zero that changes things?

Surely no one would agree with the idea of a government that takes all the tax money it received and hordes it, collecting interest to add to the stack and getting richer and richer and richer. But advocating paying down the debt and advocating hording money for hording money's sake are actually exactly the same thing. So actually nearly everyone advocates exactly that. That's a bit of a conundrum.

Unless zero is magic. Good thing it is.

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