4 ms·

That’s not true if you have free movement of capital across the national border. Debt is a claim on future productivity of the nation, and if a necessary share

That’s not true if you have free movement of capital across the national border. Debt is a claim on future productivity of the nation, and if a necessary share of the national income is not being claimed through taxes to service the debt, capital will exit to brighter climes. That statement may have been true in 1946 when the US was the only non-shattered developed economy in town but it’s hardly axiomatic.

RobertoG 8y ago
>>"Debt is a claim on future productivity of the nation, and if a necessary share of the national income is not being claimed through taxes to service the debt, capital will exit to brighter climes. " What debt? The grandparent is telling you that debt is not necessary to finance a state that control its own floating currency.
- vijayr02 8y ago
  I don't read that? The quote says that taxes are not needed by a country that does not promise to convert its currency into gold etc. It says nothing about whether that country had issued debt outstanding or not.
- nybble41 8y ago
  > debt is not necessary to finance a state that control its own floating currency It is if you wish to avoid runaway inflation. Even countries which have cast off the fetters of the gold standard (or equivalent) have found that there are still limits to the rate at which they can issue currency. Moreover, once the implications sink in people just index prices (including wages and interest rates) to the expected rate of inflation and you're right back where you started.
  - TheCoelacanth 8y ago
    > you're right back where you started That's kind of the point. Enforce taxes so that people have less money or print money and raise inflation so that the money people have is worth less, either way the real consideration is how much of the nation's productivity you are using, not how you are getting the money.
    - vijayr02 8y ago
      Taxes don't cause people to have less money - they're purely a redistributive process
      - RobertoG 8y ago
        If a government spending is in surplus taxes means retiring money from the economy.
        vijayr02 8y ago
        Yes, but that's a separate point isn't it? If the government spends every penny it taxes, that only moves purchasing power from one sector to another.

RobertoG 8y ago

>>"Debt is a claim on future productivity of the nation, and if a necessary share of the national income is not being claimed through taxes to service the debt, capital will exit to brighter climes. " What debt? The grandparent is telling you that debt is not necessary to finance a state that control its own floating currency.

vijayr02 8y ago
I don't read that? The quote says that taxes are not needed by a country that does not promise to convert its currency into gold etc. It says nothing about whether that country had issued debt outstanding or not.
nybble41 8y ago
> debt is not necessary to finance a state that control its own floating currency It is if you wish to avoid runaway inflation. Even countries which have cast off the fetters of the gold standard (or equivalent) have found that there are still limits to the rate at which they can issue currency. Moreover, once the implications sink in people just index prices (including wages and interest rates) to the expected rate of inflation and you're right back where you started.
- TheCoelacanth 8y ago
  > you're right back where you started That's kind of the point. Enforce taxes so that people have less money or print money and raise inflation so that the money people have is worth less, either way the real consideration is how much of the nation's productivity you are using, not how you are getting the money.
  - vijayr02 8y ago
    Taxes don't cause people to have less money - they're purely a redistributive process
    - RobertoG 8y ago
      If a government spending is in surplus taxes means retiring money from the economy.
      - vijayr02 8y ago
        Yes, but that's a separate point isn't it? If the government spends every penny it taxes, that only moves purchasing power from one sector to another.