[quote=pri_dk][quote=ucodegen]Refinancing debt to lower existing debt costs is not the same as getting more debt, so this is not a good example.[/quote]
Good point, but refinancing also extends the term of the loan. Some people choose not to refinance because they don’t want to “reset” the clock and pay a mortgage for 30 more years. That’s the wrong reason.
Rich does say “refi” specifically, but I would go farther with the argument and recommend considering taking out a mortgage even if you don’t have one.
[quote]Good vs Bad debt is more dependent upon what the debt is used for and what is the return on the debt minus the cost of the debt (net proceeds of the indebtedness)[/quote]
Of course. But back to government debt: As Dave mentioned, the government (and the public critiquing the government) doesn’t distinguish between expenses and investments like other entities. The government uses debt for investments as well, it’s just not as easy to distinguish.
The largest debt the US ever incurred was during WWII. Was that a good investment or just reckless spending? (What was the net proceeds of the that indebtedness?)
That’s where most people don’t get it when it comes to stimulus “spending.” If the government could re-brand it as stimulus “investing” then maybe that would help. If borrowing and spending/investing ultimately results in just a few percentage points of economic growth, then the proceeds could easily exceed the cost of the indebtedness.
I have no idea if the stimulus is working because it’s incredibly hard to figure. Some Econ Phds can figure that out years from now (and argue about it I’m sure.) But I do know that stimulus spending is a more sound and actionable plan than “cut taxes and hope rich folks decide to do some hiring.”[/quote]
Totally agree, and especially liked your last paragraph, pri_dk.
