Quote:
Originally Posted by GratefulCitizen
Debt doesn't work the same way for governments as it does for the rest of us.
Even running a surplus, the true "tax" burden is still the spending, as a percentage of GDP.
Debt, deficits, and surplus are meaningless to a government using a fiat currency.
The real-time tax burden is extracted through a combination of direct confiscation (what we normally call "tax"), inflation, and financial repression.
A combination of fiscal policy, monetary policy, and economic circumstance determine how much burden is extracted by which method.
The burden, in total, is equal to spending (as a percentage of GDP).
The burden on future generations isn't the debt, as debt is a zero-sum game.
The burden is the misallocation of resources (spending) and resultant loss of potential growth.
Money isn't real.
Goods and services are real.
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I look at these two reports today released by the CBO for my take on the debt and deficit(s):
Choices for Deficit Reduction
Fiscal Tightening
At the end of the day, our government spends more than it takes in and whether the debt is unfunded liabilities (SS / Medicare / Federal employee retirements); interest service on the debt; loans outstanding to other nations; or other items, we will be Greece in another decade if we don't change our ways now...right now it will be painful, but doable...10 years from now, it will be unfathomably difficult.