On Feb 12, 2008, at 3:43 PM, Max B. Sawicky wrote:
> If time of payment never arrives, then borrowing is a free lunch.
> If you insist on seeing the period of interest payments as
> truncated (short of eternity), then the present value of interest
> is less than the money borrowed and spent. That's a redistribution
> from capital to the public sector.
>
> Public debt need not grow faster than GDP, and if did bump up from
> 35 to 45, there would be no big deal.
How about 45 to 55? 55 to 65? 65 to 165? When, if ever, does it become a problem?
> All respect to O'Connor, but we could just as easily say higher
> public spending made possible by borrowing increases the command of
> the public sector over economic output.
Taxing increases the public sector's command over output. Borrowing eventually makes your creditors powerful, unless you're talking about deficits that they're the rough equivalent of balance.