An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Thursday, February 27, 2014
Matthew Yglesias — The Chart the Debt Alarmists Don't Want You to See
From Thomas Piketty's book. There is no net public debt (public investment less public debt).
Matt's chart is strange. "Public assets" in Piketty's usage includes all the government's fixed assets, financial assets and land. But even the debt alarmists know that the US government is not literally insolvent, and that it possesses a great deal of land and fixed capital wealth. What they argue is that we are on a fiscal path that will lead to higher borrowing costs and debt service payments, higher tax burdens and/or dollar devaluation.
If progressives respond to these arguments by arguing that the US govt has positive real net worth, and can always pay its debt by selling off Yellowstone or the USS Nimitz, they have clearly lost the political argument.
The focus should be on budget sustainability arguments that do not depend on the ultimate capacity of government to sell off is fixed and real public wealth.
Matt's chart is strange. "Public assets" in Piketty's usage includes all the government's fixed assets, financial assets and land. But even the debt alarmists know that the US government is not literally insolvent, and that it possesses a great deal of land and fixed capital wealth. What they argue is that we are on a fiscal path that will lead to higher borrowing costs and debt service payments, higher tax burdens and/or dollar devaluation.
ReplyDeleteIf progressives respond to these arguments by arguing that the US govt has positive real net worth, and can always pay its debt by selling off Yellowstone or the USS Nimitz, they have clearly lost the political argument.
The focus should be on budget sustainability arguments that do not depend on the ultimate capacity of government to sell off is fixed and real public wealth.