If there are problems with paying off any deficit, why not take the cash that might be used to pay it off and, well, save it? I realise that the government can’t exactly open a savings account at a high street bank and deposit billions in it, but there must be some way. Don’t some middle eastern countries do this? I thought one of the Scandinavian nations had a huge $100 billion oil fund. How is this structured?
I’m of the opinion that too many politicians are rather short-termist and couldn’t care less about *future *benefits. “How’s it going to help **me **get re-elected?” seems to be the only pertinent question on most issues. Hence this is a largely theoretical question.
You may have stopped reading before getting to my real point: if the government is doing a massive buyback of a certain type of asset which is owned by many investors, at some point the investors will demand a premium to sell back their investment. IANAE, but it isn’t hard to see that the actual cost of buying back every bond within a short timeframe will be who-knows-how-many billions more than that $414 figure. That’s one problem with the OP’s suggestion of a lump sum retirement of all national debt. If the buyback of debt was more moderately paced, that problem probably wouldn’t be as big.
If you have a problem with people investing money in instruments that gain value because of taxpayer funds, that horse is already long out of the gate.
Ravenman, I know that if the government (whichever one we’re talking about) tried to retire the entire debt in one fell swoop, that action would drive up the price of the debt instruments. What I would suggest is using a budget surpluss to pay off those instruments as they mature (which amount is already specified and non-negotiable, I believe) and not issue new ones. We just have to keep that surpluss going for a while. Last year’s 30-year treasury bills would mature in 29 years, and we’re in the clear.
I don’t have a problem with it at all. I don’t even have a problem with my government running a deficit, when it has to. My problem is when people try to rationalize the deficit as a service to investors. While we’re using equine metaphors, that’s putting the cart before the the horse.
It’s simple. The government needs a certain amount of money to do what we all need and want it to. It gets some amount of money from us to make that happen. Ideally, those amounts would match. In reality, they won’t. If the government needs to borrow during the bad times and pay that money back during the good times, that’s fine. And it certainly makes things easier that there are investors who are willing, even anxious, to lend money to the government. But the government was not created as an entity to serve investors, and the debt should not be justified and perpetuated for their benefit.
RobotArm: Then it appears we’re in violent agreement. Damn you!
But really, I was only limiting the scope of my response to what was proposed in the OP, which was defined as an attempt to pay off the national debt all at once, and questioning how that could possibly be a bad thing.
Yes, saving it involves setting up a Sovereign Wealth fund. That is, the government would use the proceeds to buy stocks, bonds and other assets. Here’s an article on the subject.
The Globe & Mail, the paper mentioned in the OP, is NOT owned by Asper. It employs many people who basically fled the Canwest empire because of the attitude you despise…
Global TV, which is part of the Canwest empire, has virtually no audience east of Ontario, which is why it announced layoffs throughout Quebec and the Maritimes this week.
If you think the CBC is pro- Liberal, you should have been paying attention during the Chretien/Martin years, because Chretien slashed lots of money from the Corp, and they pissed on him in return.
You should get your facts straight before you go panning stuff you know nothing about.
