Debt and Future Generations

As the national debt approaches $16.4 trillion, it is worth reminding ourselves why that debt should give us cause for concern. Government spending itself can be harmful because it crowds out private investment, redirecting resources to projects that are designed more for political than economic benefit. But the debt itself -- outlays in excess of receipts -- has consequences beyond that of even a "responsible" level of spending, since it represents payments that future generations will have to make. By racking up debt today, we are imposing a burden on our children. Keynesian economists object and say that debt does not hurt future generations, provided that "we owe it to ourselves." Dean Baker writes that "As a country we cannot impose huge debt burdens on our children [since] the ownership of our debt will be passed on to our children. If we have some huge thousand trillion dollar debt that is owed to our children, then how have we imposed a burden on them?" The reasoning seems...(Read Full Article)

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