> Easier: default on the debt made by previous generations.

Previous generations didn't leave us with much debt. Half of the debt is from post-2007. 85% or so came after 1990.

Previous generations were actually good stewards compared to today.

inflation distorts these numbers pretty massively. Especially when you consider something like "quantitative easing" to actually be causing massive inflation, but not visible to consumers in anything except housing, health care and education (all three are not tracked by typical inflation indicators either). The reason that traditional indicators are not being touched is that money is being sucked out of peoples pockets by the aforementioned three factors faster than printed money can inflate them.

> actually be causing massive inflation, but not visible to consumers

This is like the "dark matter" theory of the universe, but without any evidence.

(The conventional explanation for health and education cost increases is "Baumol cost disease" due to non-automation.)

Its tough to explain why housing costs are exploding all over the country, year upon year, almost everywhere (NOT just popular to move to cities like SF and NY), double digit numbers without asking where all the money is coming from.

I wont deny that cost disease likely has a role in the rising costs of education and healthcare, but I don't think its a controversial statement that rising real estate costs play a role in that too.

Unlike dark matter, we can measure the money. Take the M2 monetary aggregate ( https://fred.stlouisfed.org/series/M2 ). Unless the US has doubled the amount of resources since the financial crisis, the value of the dollars should be reducing vs goods or assets, as the supply of dollars is increasing rapidly.

Yes, and we can also measure the inflation rate, which is pretty flat: https://tradingeconomics.com/united-states/inflation-cpi

So why don't these two line up? I submit two candidate explanations:

a) inflation is actually more an exchange-rate phenomenon, especially vs the dollar, so printing dollars or virtual M2 dollars makes remarkably little difference;

b) CPI does a poor job of capturing cost-of-living due to housing.

Most of the money printed is also after 1990.

Not if they led us toward this

"default on the debt" == "invalidate government bonds" == "blow up everything dependent on treating those as relatively safe assets" == "massive losses or bankruptcy of private pensions and insurance companies"

The Argentinian bond default from the early 2000s is still being litigated.

Mortgages to buy houses are not at all inevitable. Arguably they're the root of most of our debt issues.

"Arguably they're the root of most of our debt issues."

Are they? Growing debt is necessary for a growing economy in a debt based society (AKA capitalism). It was the housing debt bubble that kept the economy going (by increasing debt), it was not the housing bubble causing the problems.

"The question is: when do we reach the point that oil supply is growing too slowly to produce the level of economic growth needed to keep our current debt system from crashing?" http://www.resilience.org/stories/2014-02-12/limits-to-growt...

> Growing debt is necessary for a growing economy in a debt based society (AKA capitalism).

You can also increase the velocity of money; the economy is the product of the supply and the velocity.

> It was the housing debt bubble that kept the economy going (by increasing debt), it was not the housing bubble causing the problems.

A bubble is a problem almost by definition.

"A bubble is a problem almost by definition." Define a "bubble". Capitalism, a debt based driven industrialized society (high capital requirements and pre financing for the production of goods) is a running bubble. You always have to create a bigger one. And that "most money was printed the last 10 years" is just a consequence of this.

> Define a "bubble".

When overvaluation falls into a self-reinforcing spiral. Of course overvaluation is only obvious in retrospect. But our industrialised society has delivered a lot of very real quality-of-life improvements, so I think the value is real.

By definition, a society based on debt has a negative net worth on the books.

The only people who can logically value the perpetually indebted existence of billions of people and the massive leverage that comes with that as a net gain are the central banks to which the debt and interest is owed.

"By definition, a society based on debt has a negative net worth on the books."

No. One man's assets are another man's liabilities. And debt creation is always based on a better tomorrow. Why most big companies (there may be very few exceptions) have a shitload of debt? Even Oil giants have a tremendous amount of debt. Debt is always paid back with more debt (in hope of a better tomorrow). This systems works extremely well as long as tomorrow IS better than today. It will collapse, it must collapse when the growth stops. In this regard, Ludwig von Mises was actually wrong since he always describes perfectly a middle ages based trading and marked based society but not capitalism (so after 1750). He also dreamed of "treasure boxes" that entrepreneurs must have in their cellars to do investments. There are no treasure boxes and it is the pressure from debt that give us this tremendous dynamic.

Let him speak for himself: http://www.azquotes.com/picture-quotes/quote-credit-expansio... He is right with that. But what he does not say is that ALL booms bring a credit expansion. This is the very inherent thing of a boom.

Small joke on the side:

"Net worth": http://christianfinanceblog.com/wp-content/uploads/2009/03/n...

>One man's assets are another man's liabilities.

Exactly. National debt is a liability for the nation. It's an asset for the central bank which created it. Ipso facto the central bank owns the nation.

Mortgages provide the means for many people to own the place they sleep, and where they keep most of their property, so I think mortgages are a good thing.

It's a funny kind of "ownership". If they can't pay because they lose their job or the like they'll be kicked out of their home same as someone who's renting. And then people achieve ownership and independence right at the point in their lives where they should be looking to build tighter ties and preparing to rely on others.