Re: Debtor Nation, another view

On Wed, 12 Oct 2005 16:45:18 GMT, royls@xxxxxxxxx wrote:

>On Wed, 12 Oct 2005 07:05:30 GMT, Mason A. Clark
><masoncERASETHIS@xxxxxxxxxxxxx> wrote:
>
>>On Tue, 11 Oct 2005 16:14:48 -0700, William F Hummel <wfhummel@xxxxxxxxxxx>
>>wrote:
>>
>>> Debtor Nation, Without Rhetoric
>>> By Thomas Nugent
>>> Feb 24. 2004
>>>
>>>In the world of economic analysis, fundamental truths are sometimes
>>>lost to rhetoric.
>
>And this article is a good example.
>
>>For example, it is fact ? not theory ? that
>>>government budget deficits add exactly that amount to the savings of
>>>financial assets that the rest of us hold.
>>
>>Again, I didn't intend to post any comment, but for crying out loud *who*
>>is "the rest of us"?
>
>He means the rich.
>
>>I know people who have *no* financial assets. What
>>part of the "rest" are they?
>
>They are the ones who will be compelled to pay the taxes that will be
>paid to the rich, and to the banks and other financial institutions
>the rich own, who together own the additional "private sector
>financial assets" that government borrowing creates for them.
>
>>Things like this I regard as either ignorance or rhetorical tricks and stop
>>my reading.
>
>Yes, it's deceitful to claim that government debt creates more private
>sector financial assets, and try to obscure the fact that those assets
>are nothing but a liability to future taxpayers. Of course, the whole
>idea is that those who own the assets are not the ones who will be
>paying the taxes that give those assets value.

Ho hum, we've been here before.

A dollar bill is a financial asset for the holder. It is also a
liability of the Fed (government debt). It is obviously not a
liability of future tax payers.

A treasury bond is a financial asset for the holder. It is also a
liability of the Treasury (government debt). It may be less obvious
to some that a treasury bond is not a liability of future tax payers.
It can be rolled over indefinitely without affecting the tax bill.
That means it is the financial equivalent of a bond with no maturity.
A bond that never matures obviously does not have to be redeemed by
future tax payers.

.

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