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Parcus

Government debt

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Is government debt a true economic issue? 

 

No, here is why. 

The notion that people today are “living at the expense of future generations” is nonsense. Any future generation cannot send goods and services back in time, and our wealth today is dependent on the goods and services produced, owned and consumed today, not long into the future. The repayment of future government debt comes from three sources: Central bank open market operations. The government rolling over its debt. As long as people keep purchasing the debt on money markets, there isn't an issue.  The government’s repayment might be from current tax revenues. But, when GDP expands, the government has is able to get more tax receipts which compile over time, which means that the burden of interest servicing and paying back debt falls as the population increases, GDP grows and tax revenues rise. 

 

Many, when talking about debt, conflate PRIVATE debt, and government debt, but these are very different for the following reasons: the government is the only issuer of its currency, governments can counterfeit, private citizens cannot. The government can roll over its debt, while many individuals cannot. The central bank can influence interest rates and bond yields. Then finally, access to growing numbers of tax receipts lower the debt to GDP ratio, which is what you really have to worry about. Sure we may have a lot of debt, but we also have A LOT of GDP at our disposal. 

If anything, the unwillingness of this generation to want to hit high output and low unemployment is robbing the future generations of wealth and prosperity and a solid economic foundation. 

Feel free to fight me on this 💪🏻🐈

-Parcus

Edited by Parcus

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7 hours ago, softwareNerd said:

Does your intellectual opposition believe that future generations can literally send goods and services back in time?

No, it was setting up the whole "future prosperity is based on the economic foundations we set now with output and investment"

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Problem with that theory is that taxation is a form of theft. So, when future generations are taxed to pay for your debt, you are stealing from them. Doesn't matter how big a burden that tax is. A little theft is still theft.

And yes, taxation is the main thing backing up government debt. Without the ability to tax, governments would not be able to borrow to the extent they are borrowing.

Edited by Nicky

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