> If instead of borrowing money the government pays back debt, who will
> borrow that money the government is paying back? Or will it stuff sugar
> bowls?
Bondholders will have to find other financial assets to buy if they don't spend down their wealth. This would bid up the prices of assets, make for a more bubbly and volatile financial market, foment some wacky investment projects and some profitable ones, and if Keynes was right reduce employment to some extent. If Keynes was wrong and today's economic mainstream is right, the profitable investments will be sufficient to augment economic growth, as it is conventionally defined. I'll leave the Marxist scenario to others.
mbs