Comment 73601

By Undustrial (registered) - website | Posted February 01, 2012 at 12:55:52

Government debt is the bedrock of capitalism. It's one of the safest and most stable investments around, making it indispensable for larger institutions (banks, funds etc) to hedge their bets while purchasing riskier assets like property, mortgages or stocks. If the government balances its budgets, that means no more treasury bonds, and that would threaten the very nature of money as we know it. Also worth mentioning is that the infrastructure paid for by government debt (courts, roads, hospitals etc) are at least as indispensable to the rest of the economy as services, and often again as lucrative contracts.

So, as long as we live under a capitalist economy, there's certainly an argument which can be made that a relatively stable amount of government debt. Tax revenues, after all, are totally dependent on this economy functioning, and if it slows we'll have little other choice but to take on more debt. Unfortunately, the amount of debt we have is not stable and has been exploding since around 1980, most of all under conservative administrations usually coming into power promising to do the exact opposite. One need only look toward southern Europe right now to see where this is leading.

"Today, the notion of progress in a single line without goal or limit seems perhaps the most parochial notion of a very parochial century." — Lewis Mumford

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