(No time to watch the 1 hour video right now.)
DeLong:
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! ;-)
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! ;-)