We don't have a debt problem. We have a debt project. It's just numbers in a spreadsheet, easily expandable so long as population is expanding, easily contracted if the population is shrinking. To say that future generations will need to pay for it is a misunderstanding of federal debt. Future generations will inherit the wealth, not pay for it.
Because reduction of federal debt causes recessions. Do you own Treasuries? If so, you have an income stream. You have a financial asset, not a liability. In fact, about the safest asset you can own, which is why they call it the "risk-free rate," which is only modestly a misnomer. If you reduce the federal debt, as the Clinton administration did, you get a recession. This is the dirty little secret: the national debt is a measure of net financial assets in the private sector, and all the wealthy billionaires who hoard the debt have financial assets, not liabilities. The private sector demands the federal government operate in deficit.
A related concept I've been considering is if democracy can really survive in an era of population decline. What we see in the US is that the Boomers, through entirely democratic means, vote continually to give themselves more benefits at the expense of younger generations. The Boomers are wealthier than younger generations (mostly through asset gains) so we have a kind of reverse Robinhood situation of taking from the poor and giving to the rich. This wealth dynamic is of course nothing new, see Turchin's wealth pump, etc, but typically it is the elites taking from the poor via non-democratic means; having such upwards wealth transfers be supported via a truly democratic process is new. This seems like an unstable configuration.
We don't have a debt problem. We have a debt project. It's just numbers in a spreadsheet, easily expandable so long as population is expanding, easily contracted if the population is shrinking. To say that future generations will need to pay for it is a misunderstanding of federal debt. Future generations will inherit the wealth, not pay for it.
If it's so easy contracted, why isn't nations doing it?
Because reduction of federal debt causes recessions. Do you own Treasuries? If so, you have an income stream. You have a financial asset, not a liability. In fact, about the safest asset you can own, which is why they call it the "risk-free rate," which is only modestly a misnomer. If you reduce the federal debt, as the Clinton administration did, you get a recession. This is the dirty little secret: the national debt is a measure of net financial assets in the private sector, and all the wealthy billionaires who hoard the debt have financial assets, not liabilities. The private sector demands the federal government operate in deficit.
great article, Hanno
probably I missed it and you mentioned it somewhere, but in addition to debt, we will also have problems with ideas and growth..
A related concept I've been considering is if democracy can really survive in an era of population decline. What we see in the US is that the Boomers, through entirely democratic means, vote continually to give themselves more benefits at the expense of younger generations. The Boomers are wealthier than younger generations (mostly through asset gains) so we have a kind of reverse Robinhood situation of taking from the poor and giving to the rich. This wealth dynamic is of course nothing new, see Turchin's wealth pump, etc, but typically it is the elites taking from the poor via non-democratic means; having such upwards wealth transfers be supported via a truly democratic process is new. This seems like an unstable configuration.