January 03, 2012

Dean Baker Discovers That Debt and Logic Don't Matter

Dean Baker has discovered a way for governments to go infinitely into debt and not worry about paying back.  The idea is that because Treasuries are ultimately sold to banks and other players whose principals will be dead in the future, and future bankers are part of the next generation, then spending now and hitting our children's tab technically isn't accurate.  No, such debt is not a burden on the entire next generation.  Only 99.9999 percent of it.  Ergo, debt doesn't matter.

He follows up this remarkable sophistry by saying that the real legacy to the future is climate change.

I modestly propose combining his observations.  The US government can borrow $100T to purchase a like quantity of solar panels.  This will not only provide more than enough clean electricity, but also ensure full employment for awhile.  Assuming indefinite 2% interest rates (because any other assumption is unthinkable), the future P&I burden per household might be around $10,000 per month.  Fortunately, in the Dean Baker future, this will be offset by each household having $10,000 per month in income from their multi-million dollar T bond portfolio, because "it's money we owe to ourselves".  We could repeat this to solve all other social problems.

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