You’re referring to the ‘interest’ paid on the debt here, I think. If so, then yes, the community will
pay back over time more than it borrowed.
continues:- ) It doesn't matter
who pays for those services the equation cannot be made to balance unless
someone accepts an ever increasing burden of debt under our presentfinancial
replies;- ) Not necessarily. Debt expands when the economy expands.
‘do’ things. Individually, or as a ‘community’. Not because there’s ‘interest’ on the
money borrowed, (unless it’s not being paid as it becomes due.) If you owned a company and you borrowed
money from a Bank only the sum you borrowed shows up on your Balance Sheet as
your ‘Liability’. Your ‘debt’.
Not the sum you borrowed plus the
is simply another ‘cost’ that accrues over time. Even to a ‘Government’. The same as fuel, or electricity, or
anything else it might pay for as an ongoing ‘cost’.
continues:- ) Governments fall into the trap quite
happily because they can appear to "make the books balance" by judicious
"creative accountancy" hiding the real costs among other government expenses
and using tax revenue to service rather than pay back any loans.
replies:- ) If your Government used tax revenue to
pay back loans rather than just servicing them, your country’s ‘money supply’
would shrink by the amount paid back.
Loans create deposits, and the repayment of loans ‘destroys’ those
deposits. The ‘money’ paid back
is sent to oblivion. But many of
the ‘price values’ that money created when it passed through the economy as
‘costs’ to be recovered in final price probably still exist. Only the ‘money’ that could’ve
liquidated them has been removed from circulation by ‘tax’ and sent to
at your economy overall, goods for sale in your country
will not be able to be all sold if money is so diverted. Not, at least, at the prices
necessary to obtain, overall, for those who made them to all recover
their full costs and a profit.
There’s already an increasing disparity between ‘prices’ and ‘money’ in
the economy as a whole, and repaying the National Debt through taxation
generally makes it worse. And it will be worse, unless someone
‘borrows’ some more money, (or you’re continually running a ‘favourable’ trade
balance, or receiving more foreign investment than you’re making,
or losing in returns being remitted abroad on it. And an overall surplus of
‘credit’ is coming in from abroad.)
someone is borrowing ‘more’ money they are creating further ‘costs’ that will
have to be liquidated from future prices or consumer incomes. Paying your ‘National Debt’ down
through taxation really just transfers that debt from the ‘government’ to
‘private’ borrowers if you are to avoid a recession. The ‘problem’ is that with ongoing
‘labour displacement’, in all its varied forms, the economy is not currently
fully ‘financially’ self-liquidating.
other words the ‘orthodox’ economist’s assumption that overall ‘‘Costs = Incomes = Spending from incomes’’,
that it IS ‘financially’ self-liquidating ~ something that was once probably
roughly true in a ‘laboured’ economy of old ~ is becoming increasingly less true as
time and ‘machine power-driven’ industrial progress marches on. The sanest solution to this problem,
probably the only sane
solution, is to augment CONSUMER INCOMES with debt-free ‘new credit’ not
‘costed’ into ‘prices’. Through the aegis of the Compensated
Price Discount and the National Dividend.
‘labour displacement’ ongoing and increasing, the rate of flow of aggregate
CONSUMER INCOMES and the ‘spending’ therefrom,
increasingly lags the rate of flow overall ‘financial’ COSTS are
being generated. The difference
is currently made up by ever more ‘debt’.
that ‘interest’ is the problem is a great mistake. It isn’t really any problem at
all. Having your Reserve Bank fund
Government infrastructure in the belief that this will save the taxpayer
‘interest’ will only end up costing the taxpayer far more than any interest
saving in continually rising prices and debasement of your currency. A proper set of ‘national accounts’,
with a National Balance Sheet which accurately records the physical realities
of your overall economy complete with a ‘national capital account’, (instead of the present National
Debt), from which ‘dividends’ can be paid as necessary to CONSUMERS directly or through lower prices, would eliminate the current pile up of
otherwise unrepayable business debt which eventually
forms a large portion of your equally, currently unrepayable
(without disastrous consequences), National
adequate and increasing CONSUMER incomes, funding new ‘infrastructure’ or other ‘government’
provided services that your
citizens agree are beneficial,
becomes a problem much easier to
effectively solve on whatever basis can be shown to be most appropriate.
continues:- ) Private organisations
are required to "run at a profit" unless they can obtain a government retainer
to cover expenses outside their "normal running costs". Neither system is
satisfactory. Sooner or later someone demands a redemption of those
loans, and, at that stage, you get the contraction in the money supply. The
subsequent hardship to the community because "normal commerce" cannot take
place leads to the ridiculous position where people starve when there is a
surplus of material to alleviate that starvation. Money is being removed from
circulation contracting the volume of commerce taking place. Countries
with high levels of service industries like the western world are very
vulnerable to this type of contraction. The prosperity of the west has
depended upon the USA accepting
large deficits in its budgets since about 1947 (starting with the Marshall Aid
Plan). Ominously a collapse in the value of the US dollar would hit the west
very heavily. This is what recent acts by Bush and Blair have been trying to