Here’s a challenge I gave to Daniel Kuehn in his comments:
==> Do you agree that Krugman said there is a sense in which debt makes a household or a family poorer? But that he denied this truth for the individual family could be aggregated to the USA as a whole?
==> If you agree with the above, give me a specific numerical example of what it means for a family to be made poorer in the future by running up a debt today. Then, defy me to show you in my apple examples what this would look like, at the USA level. In other words tell me what it would mean if Krugman were wrong, and that the USA *could* be made poorer in the future because of running up the debt today, in the same way that Krugman agrees could happen with an individual family. So then you tell me, “Bob, if Krugman were wrong, then you would be able to construct an apple scenario showing such-and-such. But it impossible for you to do so. If you *could* do so, I would agree you have been right and Krugman’s narrow point is wrong, and we need other arguments to justify deficits today.”
As is his wont, Daniel denied that Krugman said debt could make a family poorer in the future. To bolster my understanding that Krugman thinks debt *does* make an individual family poorer in the future, here are two quotes from him:
People think of debt’s role in the economy as if it were the same as what debt means for an individual: there’s a lot of money you have to pay to someone else. But that’s all wrong; the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.
And for the coup de grace:
But that’s not what people mean when they speak about the burden of the debt on future generations; what they mean is that America as a whole will be poorer, just as a family that runs up debt is poorer thereafter. Does this make any sense?
OK everybody? So I want you all to show me a specific numerical example in which you agree that a family *does* make itself poorer in the future, because it ran up a debt today. Then, tell me specifically what it would look like in my apple model, for “the nation” to do the same thing, and why it would be impossible for me to actually construct such an example.