Not a blog but a "q-and-a" (pronounced "quanda"), this page is about the basics of economics. Its premise: there are no stupid q's. And if some a's seem dim, take heart: I can brighten them up in response to objections, corrections, refinements. Comments on posts feature yours, and my responses. Enough of you now frequent and query the quanda that I post most every day. Haven't seen your q yet? Send it again. All a's should be taken with a shaker of sodium chloride, if not a Lot's-wife's-worth. And speaking of salt, the mustache and "hair" in the photo has a lot less of that condiment, and rather more pepper, than can be seen on TV. Think of it as time travel.
Question: Economists seem to agree that the debt cannot be sustained. I'm skeptical of this generality -- that is, not all debt is the same. Isn't it important to distinguish between the debt incurred to improve production and research, versus debt incurred for pure consumption?
Paul Solman: Absolutely. The first rule of debt: It's not how much you borrow; it's what you do with the money. What economists agree on is that UNPRODUCTIVE debt cannot be sustained. If you borrow money and use 100 percent of it to buy goods from China and oil from the Middle East for Sunday drives, you're unlikely to be rich enough, in the future, to pay back the interest and principal.
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Is All Debt Unsustainable?
**Question:** Economists seem to agree that the debt cannot be sustained. I'm skeptical of this generality -- that is, not all debt is the same. Isn't it important to distinguish between the debt incurred to improve production and research, versus debt incurred for pure consumption?
**Paul Solman:** Absolutely. The first rule of debt: It's not how much you borrow; it's what you do with the money. What economists agree on is that UNPRODUCTIVE debt cannot be sustained. If you borrow money and use 100 percent of it to buy goods from China and oil from the Middle East for Sunday drives, you're unlikely to be rich enough, in the future, to pay back the interest and principal.
