Quote from: deisik on April 16, 2015, 03:53:07 PM

Nevertheless, this has unforeseen consequences. Say, you happily live (or someone else lives, for that matter) off debt all your life and then one day you die. What happens to debt? Could we draw an analogy here with the debt being written off in the end on a global scale?

With credit comes risk. You can always default on debt, and dying is a way of defaulting on personal debt.
Debt is not an absolute moral duty or something of the kind. In fact, one of the important things in business is that credit risk can be materialised without people being sold as slaves or something of that kind: it is called defaulting.
When there is a default, the creditor looses his money. And that was part of his risk. This is why a creditor bears a part of the responsibility of loosing his money. But of course, defaulting shouldn't be too easy either. You should have done everything which is reasonable to avoid default. You shouldn't gain any advantage in defaulting.
But one of the most important "inventions" in doing business is the limited responsability. A share holder can loose all of his share value, but cannot go negative. If you are a share holder of a business, and that business goes broke, as a share holder, you do not get the burden of the debt.

Because an absolute burden of debt is unbearable. The creditor should take part of the risk. By allowing to default (and not transmit the debt on the back of the share holders) you make the creditor assume also his risk.

Quote

What is debt then actually?

You might read David Graeber's book: "debt, the first 5000 years".
I'm not 100% in agreement with his positions, but his book is fascinating nevertheless.

In fact there are two kinds of "debt", and only one is really debt, and the other is just another name for extortion.

To me, a genuine debt can only result from a freely taken contract: the debt is "your part of the duty in the contract you agreed freely upon".

If we agree that you give me a hair cut today, and I will mow your lawn next week, then during a week, I have a debt with you, because you did cut my hair, and I still have to do my part of the contract: mowing your lawn.

But if some or other authority inflicts a debt onto you, that's nothing else but a form of extortion, formulated as if it were a debt. If I say: "I, Lord of you, will give you protection, and you owe me a compensation for that protection", then that can be formulated as if you had a debt with me, and most of the debts in Graeber's book are of this kind, but it is nothing else but a delayed form of extortion by force.

Also, from what I say, it follows that debt cannot be herited. Debt goes into default at latest when the debtor dies. Because the children didn't freely sign the contract. So they cannot be held responsible for the debt.

So, to me sound debt satisfies these two rules:
1) debt can only result as the effect of a freely taken contract by an individual or a business
2) the creditor must assume a risk of default

There is no "blood and honor" duty to pay back any debt. If the terms of the agreed-upon risk are met, then the debtor defaults, and the creditor assumes the risk and looses his money.
And debt cannot be inherited. There is no primordial debt. Nobody can inflict debt upon you.

And this is where something goes seriously wrong with government debt. Debt is inflicted upon its citizens. And debt will be inherited. It violates the two principles of sound debt.