Whoa, I almost spared all of you by forgetting to link to my latest article in the Freeman. I did my best to summarize what is wrong with the we-owe-it-to-ourselves “insight” on government debt. I’m pretty sure the example I spell out in the article is new. Anyway, here is the conclusion:
If an imperialist government paid for popular spending programs by levying a tax not on its own citizens but on a conquered land, the scheme would of course be a gigantic theft working across space and through the currency markets. Deficit finance is similar, working across time and through the bond markets. It allows today’s citizens to pay for government goodies by levying a tax on unborn generations who have no say in the political decision.