If you had 34 trillion in debt and a centuries-long history of making on-time payments, you’d have a perfect credit score.
“Bankers hate him! Get an 850 credit score and dictate the terms and interest rate of your own debt using this one simple trick.”
The US govt basically has a perfect credit score. They have almost infinite payment history and almost infinite available credit.
Yeah, this is just people not understanding how credit scores work, part #57294, lol
Don’t forget being the only issuer of the currency you get indebted in. If I could get indebted in a currency I create myself, believe me I would
Credit rating also depends on credit to debt ratio. You want to keep it below 35%, so you would need a credit line of $100T or more to have a great rating.
I think sovereign debt would work like an AmEx Platimum with “no fixed limit”, which makes the algorithm ignore utilization.
Hey remember that one time where the country’s credit rating got downgraded due to political idiocy?
Pepperidge Farm remembers.
Are you immortal? Do you have an income vastly higher than the servicing cost of that debt? Do you owe the large a majority of that debt to yourself? Are you able to, if push came to shove, tell your external creditors to go fuck themselves and dare them to so much as try to collect on the debt you don’t feel like paying? If you can’t answer “yes” to all these questions, you aren’t the US and have a debt situation that has absolutely nothing in common with the US debt.
Do not forget that you are also the very entity that hands out the currency you hold your debt in.
It’s like Dwight printing IOUs for Schrutebucks
Wait till you learn about how the stock market works. Everyone with a share actually just holds an IOU in the DTCC.
It’s all built on bullshit
I remember users on another platform went into full rage mode when I said the stock market was just legalized gambling, telling me how SAFE!!! IT IS IF YOU DO YOUR RESEARCH!!!>
Okay. Black Friday and Too Big to Fail only happened in my dreams.
Two things:
- if you owe the bank $34,000, it’s your problem; if you owe the bank $34,000,000,000,000, it’s the bank’s problem.
- its a big club, and you’re not in it.
Worth pointing out that credit scores are completely detached from the government. They are entirely private industry, that is collecting and selling your financial info without your consent or opt in. If you were born before 2004, then they have also accidentally leaked literally all your personal info to the dark web, with literally 0 consequences.
Nah uh! We forced them to pay an hour’s worth of profits to their own charity!
Well, since the billionaire class doesn’t pay it’s fair share of the tax burden, that money has to come from somewhere.
This is a popular thought, but even if we take 100% from the billionaires it pays for almost one year for the US.
Now imagine if we had taken 30-40% from billionaires every single year… hmm…
We could have a couple year of almost not having a deficit.
Credit scores are just some fake shit that boomers made up. It’s so dumb.
…except that it used to be that your ability to secure a loan was based on where you went to school, how firm your handshake was, and if you happened to have the right skin color and sex organs.
The current system certainly isn’t perfect; and if you’re denied a loan you have a legal right (in the US) to know the reason.
There are systemic issues, to be sure. But the nominal goal is absolutely better than what we used to have.
My mom should have amazing credit, but she doesn’t. She does literally everything right.
Meanwhile I have really good credit and have no idea why.
It’s just made up shit and we should find a better system.
I’d definitely recommend getting a credit report (not from the websites that advertise with an insane jingle, but from the actual credit bureaus — you’re entitled to a free report). Mine had debt from a relative with a similar name; I was able to get that removed. They will also tell you in more detail what goes in to calculating it.
I agree that it’s not perfect, and often very opaque, but you should be able to get some understanding of why she doesn’t have good credit.
and have no idea why
Just because you refuse to learn doesn’t mean it’s magic. It is very simple to understand why exactly you have the credit score you do. Maybe mommy isn’t being entirely truthful with you.
Only people who are bad credit risks ever come up with this take, lmao.
The sole function of credit scores is to benefit people who are reliably ‘good for it’ when they borrow money. Without them, everyone is treated as just as high a risk as the worst borrowers who are least likely to pay back their debts, and you gain no benefit from reliably paying back your debts. But with them, your good borrowing is kept track of, and good reputation means lenders trust you more to pay your debts back, so they’re willing to lend more, and they are willing to charge less interest.
Removing credit scores changes nothing for bad borrowers, and hurts good borrowers.
The thing is you’re forgetting who are good borrowers and who are bad borrowers. A person with a low income with a precarious job will be a very bad borrower, and imposing a higher interest rate on them on top of that is just the final nail in the coffin. We generally believe universal healthcare is good, and we don’t want to discriminate “good health” and “bad health” people and make unhealthy people pay more, do we?
imposing a higher interest rate on them on top of that is just the final nail in the coffin.
That’s the only way to justify loaning to people like that at all, given how much more often they default (and the lender never gets repaid at all). If lenders were forced to give the same interest rate to everyone, that would cause them not to lend to “A person with a low income with a precarious job” at all.
If the lenders operate with the purpose of maximizing profit, then yeah, it makes sense not to loan money to people in precarious situations except at high interest rates, that’s my whole point: that’s evil, the profit motive leads to evil decisions. Let’s have public banks instead, where interest rates for loans are equalised, in the same way that every taxpayer gets identical access to healthcare regardless of how much they contribute through their income.
You’re discounting the people who have always lived within their means and so never took on debt. They also don’t have good credit. They’ve never missed a payment. They’re good for the money. But they don’t have a history showing that because they’ve never needed that.
You’re discounting the people who have always lived within their means and so never took on debt.
No I’m not. Those people are unknown quantities, and so also suffer if credit scores go away, because bad borrowers are worse than first-time borrowers, so without credit scores, first-timers will be treated worse.
I’m saying people who don’t play this credit game but otherwise are good financially also think it’s dumb. Not just bad risks.
Credit scores require you to get some kind of debt. This is because it’s not a score of your financial health. It’s a score of how reliably you repay your debt.
Countries can print money. If the debt is denominated in your own currency you will never not be able to pay them.
This.
More people need to understand that the debt of a sovereign nation isn’t analogous to that of a household.
Public sector debt is private sector surplus.
Public sector debt is private sector surplus.
Yes! This is the very essence of our monetary system that nobody seems to understand.
The other person who responded to me made a very all written post but it gets a core assumption completely wrong.
They seemed to think that tax revenue in some way has to happen for spending to happen. That’s why they think GDP has anything to do with our ability to service debt. But the federal government creates money ex nihilo.
Money has to be created before it can be destroyed through taxation. Spending and back stopping creation of money by private banks through the reserve system comes first. You can’t destroy something you haven’t created.
It’s sad, really. Economists and politicians have blinded everyone with what I think of as “the money delusion”.
It doesn’t matter if the money can be “gathered up” to be spent on things we need. We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.
The national “debt” is a misnomer. That’s the amount of dollars left in circulation that have not been destroyed through taxation, as well as the “dollars” that pay interest which we call bonds.
I’m glad to see at least a handful of other people who understand. Fight the good fight, fellow human.
They seemed to think that tax revenue in some way has to happen for spending to happen.
Noo!
But the federal government creates money ex nihilo.
Yes!
Money has to be created before it can be destroyed through taxation.
Yes!!
We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.
Yes, yes and yes!! ❤️
Thanks for your concise explanation of MMT! I wouldn’t be able to phrase it this well. ❤️
I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
No, that is not true. That states sell bonds is a self-imposed rule.
As long as a state collects its taxes in its own currency there will be demand for that currency.
What happens when they run out of people to sell bonds to and they run out of money to tax?
Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).
Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.
How do they make money out of thin air?
Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.
No they cant, that is illegal. You could say they will change the law so that they can do that, but that is not possible (in america) at this time.
But you do have to pay that shit back … forever. And printing money leads to currency devaluation, makes everything else more expensive
Even if you don’t think the debt itself is unmanageable, you start having problems like
The economist ewww. The limits to how much money you can print is defined by the productive capacity of your country. If you print more money to increase productive capacity then it’s generally not a problem. The debt is simply an accounting fiction at that point.
Tell me you don’t understand how credit score works without telling me you don’t understand how credit score works
Terry Pratchett’s “Making Money” taught me enough economics to know that individual debt and national debt are two different things.
if it makes you feel any better you’d go to prison if you decided to run a ponzi scheme… unless you’re a bank, that is
Wait a bank is a Ponzi scheme
Not literally. I bet the poster notices the overlap between ponzi and fractional reserve lending and doesn’t care about the differences
Which is?
Lota of differences but the key is: A ponzi scheme pays returns out of future investment. Fractional reserve lending pays returns from interest collected on investments.
I heard that the us still has good credit because although it owes trillions, it is worth quadrillions (all lands and assets), so not really a concern
How much does the USA have in assets? I’m willing to bet more than $34,000,000,000,000.00.
They could sell Wyoming to Canada, that’d be alright with me.
Canada couldn’t afford it, their monopoly money is worth almost nothing.
I wonder how many debt collector calls the Whitehouse gets a day
The US also has a credit score but with other countries they do business.
