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New Meh. Why *should* the US pay off the debt?
(No time to watch the 1 hour video right now.)

DeLong:

But, Dean Baker would correctly say, the reason that the next generation's debt-holders are not winners is because they acquire debt instead of rather than in addition to real capital--that the current generation invests less in building up the capital stock. What causes the burden is not that government debt is issued, but rather that the issuance of government debt crowds out the formation of useful capital.

No crowding-out of investment, no burden of the debt on the future.

Thus the argument that issuing debt burdens future generations is really an argument that issuing debt right now crowds-out investment by shifting resources from forming capital to working for the government, or that holding debt in the near future crowds-out investment by making people feel wealthier and shifting resources from forming capital to producing consumption goods and services.

Those are fine arguments to make, and they have a lot of validity.

But, still, if you want to argue that issuing debt in a time of deficient aggregate demand burdens the future, you need to make that argument that there is crowding-out of investment--and you need to recognize that both forms of crowding out, both crowding out via expanded government purchases and crowding out via expanded consumption driven by wealth effects, are smaller and perhaps much smaller than at full employment.


tl;dr: It depends on what the money was used for. Large deficits (and consequently an increasing debt) is good when the economy is weak due to lack of demand.

Someone making $50k a year doesn't suddenly go bankrupt if they take out a $300k, 30 year mortgage. They won't suddenly be richer if they pay off the mortgage early. They won't be poorer if they never pay off the mortgage. It depends on what they do with their total income and investments.

"Eleventy Trillion Dollar National Debt!!1 Boooo!!11 Scary!!11" Nope - not without context. And in context, it's not scary.

"Bazillion Billion Dollar Pension Debt!111 Booo!!11 Scary!!1" Nope - not without context. And in context, it's not scary.

There are lots of examples in the business world, also too. E.g. Gateway is no longer with us even though they had no debt for most of their existence. Apple makes mountains of money yet still issues bonds. Lots of rich people use "other people's money" and have mortgages on their properties.

FWIW.

Cheers,
Scott.
(I'm glad we've resolved that topic. Next! ;-)
New ICLRPD
I'm glad we've resolved that topic. Next!
--

Drew
New find the time, or 1/2 way anyway
he uses only government asserted numbers, nothing else.
Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 59 years. meep
New Re: "he uses only..."
an Excel spreadsheet. So, it has to be right! :)
Alex

"There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "my ignorance is just as good as your knowledge."

-- Isaac Asimov
     why the us can never pay off its debt - (boxley) - (10)
         Meh. Why *should* the US pay off the debt? - (Another Scott) - (3)
             ICLRPD - (drook)
             find the time, or 1/2 way anyway - (boxley) - (1)
                 Re: "he uses only..." - (a6l6e6x)
         So, how is that ruble denominated bond doing? -NT - (a6l6e6x)
         Not even a minute in and I'm pulling my hair out. - (Another Scott) - (4)
             skip to the middle, he takes forever to get to the point -NT - (boxley) - (3)
                 rofl. I'll try again later. -NT - (Another Scott)
                 So when you said "half way" you meant second half? -NT - (drook) - (1)
                     start where he explains his numbers on the spreadsheet -NT - (boxley)

The namespace is ... large. And a dictionary attack against a ... large namespace is ... large and then some.
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