Charie,
We both know that economics is the study of trends and co-relationships that are more theory than mathamatical fact. That is why the following statement is, frankly, misleading.
“jaybo, the nice thing about arithmetic is that it’s not a matter of credibility.”
It is also why the only “specific data” that you can reference is historical in nature.
The second point that you make is equally weak; “But, pace jaybo’s video, if the total assets are growing faster than the total liabilities, you can continue borrowing indefinitely.”
Notice the use of the word “IF” in the statement above. In mathamatical terms it implies that there is an undefined variable that can change the outcome.
Finally, anyone that has a backround in accounting understands that assests like your home have a value on paper that does not necessarily translate into “cash in hand”.
In truth, there is another variable that determines the “cash equivalent” of your home. It is called the Law of Supply and Demand. This law dictates the actually price that someone is willing to pay for your home today if you had to get your equity in cash.
Charlie has outlined a dangerous theory that is hauntingly similiar to those people that told investors not to worry about the lack of profits when investing in internet stocks back in the 1990s and others that said not to worry about how much you borrow to purchase a home of refinance your home recently.
In both of the examples above, individuals have lost millions of dollars collectively because they ignored basic financial priniples.
They were told the same thing that Charlie is trying to tell us here.
“Don’t worry, the price of your stock will always go up”
or
“Borrow as much as you want because the price of your home will always rise”.
The carnage that has resulted from those that listened to these “snake oil salesmen” is there for everyone to see.
So why do the basic laws of economics never apply to our national debt?
Good question……………
