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Gov debt is private sector savings. Title rephrased: We've reduced private sector assets by $119bill.
by aseerdbnarng 5y ago
Gov debt is private sector savings. Title rephrased: We've reduced private sector assets by $119bill.
- cwalv 5y agoMaybe also not a bad thing, given that the real return on those assets will likely be negative for years to come.
- aseerdbnarng 5y agoI dont agree with that and here's why: Whenever taxation > spending (ignore once off liquidation of assets), the government actively destroys private sector savings (dont take my word for it, go ahead and map the transactions on the balance sheets of the pvt sector, central bank and the treasury, and you'll see the transaction reduces pvt sector assets). What you're saying is rather than risk inflation eroding the value of those assets, lets just destroy them outright. The counter-argument could be that private sector would issue more loans on aggregate (create money) if inflation were lower but that borders on tea-leafy speculation