On Mon, May 18, 2009 at 10:20 AM, Max B. Sawicky <[email protected]> wrote: > Consider the counter-factual -- the bondholder doesn't buy the Gov > bond, he buys a private sector asset. > Abstracting from risk/return, how are the rich any richer?
Two ways government debt helps the rich get richer: 1) by avoiding the higher levels of taxation that would otherwise be required to support a power structure that is largely designed to protect their interests. 2) getting a strictly positive risk-free return. Only government bonds are entirely risk-free. If government debt levels decrease i.e. the supply of risk-free bonds decreases, the yields decrease which will also depress the rates of return on other assets. -raghu. -- "Never judge a book by its movie." - Anonymous _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
