So When Should the Government be in Debt…

Do you see a problem? If not you need glasses...

Yesterday we wained about the fact in around 500 words that the government should not be in a deficit condition for its operating budget as the goal of the government is not the redistribution of wealth.  To further this for those pundits out there who still see different, the point is look at the definition of “communism” by our friend Webster and we find him saying that it is “a theory advocating elimination of private property” therefore the more and more the government assumes emanate domain of the earning of its people via taxation, the closer it comes to meeting this definition.

Thus, when it borrows money to continue their operating programs (read as social) it is assuming labiality on the part of the “tax” paying populous as since they as we discussed yesterday are the primary source of revenue for a government, they carry with them the burden of repayment.  So quick math will show based upon this we are unable to repay our debt and we are raising the debt ceiling once again meaning we are basically levying new taxes without fair disclosure as leaders call for the voting public to call their governmental representatives.  One would be on safe ground betting dollars to donuts that the lines are divided by the 47% none taxpaying populous calling for a raise while the remaining 53% are saying stay the course.

Yet there may be times when it’s ok for the government to be in debt at a reasonable social-economic level as there does exist a positive symbiosis if done correctly and your question now is assuredly what is correct?  For starters debt should only be allowed for capital projects, typically infrastructure based where the returnable life span of the project is equal to or greater than 10 years where bonds can be floated.  In addition the bond should be sold only to the residents of the US as a savings instrument as there are a couple logical reasons.

The first is that as mentioned in yesterdays post, the establishment of “order” is a key aspect of a government obligation and to achieve this financial mechanisms are critical especially social support systems for retirement.  Therefore as the guarantor of the currency, the government makes perfect sense to provide a  holding and return instrument for the general populous with a guaranteed return  and safety net.  Now this isn’t to say this is the only means of savings, however it needs to be one.  Does it work, you bet as for many years Americans used “savings bonds” as a safe means of retirement.

The second aspect is it keeps hard dollars on shore which is a critical problem these days as we are actually short currency so anything which keeps dollars ashore is good.  Please do not get me wrong as we always have to buy from abroad as we are in a global economy and generally it’s a good thing.  The issue arises as with anything done to excess; they go bad and your hyper consumerisms as America is placed on a precipice looking down a steep cliff as the ground gives way under our feet…