A blog which I read often – Futile Democracy – posted that there wasn’t a government debt crisis.
Here is my response:
Whereas you are perfectly correct in your understanding that a “personal” debt of a real person is very different from “government” debt of an abstraction, you are very incorrect and misunderstand to why government debt is, in fact, a crisis.
When government spends money, it must spend money and wealth created by other people. It does not create wealth on its own, it takes wealth made by those “over here” and gives it to “others over there”.
Thus, government debt absorbs money and capital that would be otherwise used by the market to create jobs and wealth and applies that taken loot to spend on political purposes that by definition are not economical.
In other words, government use of money destroys economic purpose in favor of political purpose.
An increase in government spending and debt means an increase in economic destruction to favor political construction.
If the problem you are addressing is economical, then INCREASING political construction is contradictory.
By actions of political DE-construction (lowering of debt and lowering of government spending) will reverse economic destruction.
When governments take money from the citizens and spend it to rescue the jobs of one set of workers — union political supporters, in this case — what does that do to the demand for the jobs of other workers, whose products citizens would have bought with the money you took away from them?
There is no net economic gain to the country from this, though there may well be political gains for the administration from having rescued their unions supporters.
If the national debt continues to grow, a growing portion of people’s savings would go to purchase government debt rather than toward investments in productive capital goods such as factories and computers; that ‘crowding out’ of investment would lead to lower output and incomes than would otherwise occur.
You are always faced with this choice.
Either the goods and services of the market place are distributed by voluntary trade Or by the point of a gun.
The more you support the “gun” of government, the less the market place will provide in terms of goods and services. A quick review of Soviet Union, Communist China and North Korea demonstrates this truth.