On Feb 8, 2013, at 10:23 AM, Jim Devine wrote: > <[email protected]> wrote: >> I think the plan to have high government debt is just a way for the >> wealthy >> to have another way to get surplus value from workers who pay taxes >> which >> result in payment to bond holders. > > How does this work? the way I can see it is if the government cuts > programs that help the working class while raising taxes on the > working class in order to pay the interest on the debt. That seems to > be the trend. > Of course the national debt should be paid off completely. The way to do it is utterly simple. The government uses its sovereignage power to issue a coin denominated, say, at ten times (about $150t) the existing government debt. It then deposits the coin in the government's account at the FED. It then buys back at maturity all expiring debt and issues no new debt. It also transfers to the Medicare and Social Security Trust Funds an amount sufficient to fund them for the next century. The rest is used to finance expenditures whenever economic conditions are such (significant unemployed resources) that the expenditures need to be financed by deficits rather than taxes, whose functions should be to reduce inequality and to contain inflation when economic conditions (insufficient unemployed resources to cope with the desired level of aggregate demand) require that.
> It's true that the existence of the government's debt usually leads to > a redistribution upward, to the interest-earners. It also makes > government officials more dependent on the kindness of _rentiers_ (or > at least think that they are so). A socialist government (under > capitalism) wouldn't run significant deficits and pile up debts, > except perhaps to invest in infrastructure and the like. > > It's true that interest rates are likely going to rise in the future > (since they're so low now) but to some extent the government has > locked in low rates by issuing and selling long-term bonds. I'll have > to check how much they've done that, but if they're smart this is the > strategy they have followed. Shane Mage "All things are an equal exchange for fire and fire for all things, as goods are for gold and gold for goods." Herakleitos of Ephesos, fr, 90 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
