The Government Debt is NOT a Burden on Future Taxpayers (slightly wonkish)

July 15, 2015

Excellent summary of why the ‘taxing generations yet unborn’ argument against Public Sector deficits is absolute nonsense.
c/o the Origins Of Specious blog

Origin of Specious

I don’t understand why trained economists find it so hard to understand the nature of government debt.

I mean trained economists like this one:

Why will the debt need to be serviced by future taxpayers?

Suppose, for simplicity, that the deficit is zero, that is, the UK government has say 1.5trn of outstanding bonds and isn’t issuing any more.

When each bond matures, the government has to find the cash to pay the bondholder, plus interest. But it can get the cash by selling another bond to somebody else. In other words, it can keep rolling over its ‘debt’ by continually transferring bonds from one bondholder to another.

‘Yes, but every time it does this, it will need to sell more bonds, to cover the…

View original post 948 more words

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: