There’s a false argument about the national debt that goes like this.
We can’t leave a huge debt for future generations to pay off.
It’s false for a couple of reasons:
- 1. If you make good investments, they create growth and the growth pays off the investment. That’s how business works. If you build an interstate highway system, that creates growth in cities that weren’t served well by other forms of transport, they pay more taxes, and those taxes are used to pay back the bonds that were sold to create the highways.
- The time to worry is when we make investments that don’t create value, like the invasion and occupation of Iraq and Afghanistan. No growth came as a result of that borrowing. We should think very carefully before starting unnecessary wars, aside from the moral reasons, the economics are really tough.
- 2. We pay the debt back in a currency that we print. So if there isn’t enough money coming in from #1, we pay back the bond holders with new dollars. You say that’s inflationary, and I’m no economist, but I have a bit of common sense. If taxes aren’t generating enough to pay back your good investments that’s because the economy is depressed, and in those times a little inflation is a good thing, because it counteracts something even worse than inflation — deflation.
But even if you don’t buy the math of it, consider the emotional argument. You’re worried about future generations, but what about our debt to past generations that sacrificed for us so we could have good education, homes, health care, transport? Aren’t we betraying them if we let the infrastructure they built for us crumble and disappear?
When do we think about our ancestors and what we owe them?
Of course that’s what Memorial Day is for. To remember the people who came before, especially those who sacrificed so we could be propserous and healthy. We invest in our country because the only other option is to see the country crumble. And we invest because we hope for a better future for those who come next.