One day this war is gonna end...
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"The public debt transaction, then, is very different from private debt. Instead of a low-time preference creditor exchanging money for an IOU from a high-time preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people's property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract."
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The full article Repudiating the Nation Debt can be found at the Ludwig von Mises Institute.
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Friday: No Major Economic Releases
3 hours ago
3 comments:
Bearish Rant. Victim: McDonald's.
http://goldversuspaper.blogspot.com/2009/02/history.html
HEROIC. I love it when you post stuff from the Mises institute.
A man after my own heart
Meh, you could make the same argument for taxation in general. Government finance is always coercive.
I agree there's a problem, but not that the debt transaction involves coercion. Coercion in the absence of a market failure is the real problem here. It's justifiable to pay for public goods like national defense or a code of laws from an involuntary taxation of its citizenry- there's no market mechanism to provide this to everyone without everyone having to pay for it.
As far as I'm concerned, we're not in any market failure condition- markets fluctuate. These banks should go out of business, along with a lot of other companies and individuals who should be made bankrupt by the excessive debt taken and faulty risk taking over a long period of time. Unfortunately, the fact is those who can afford it (or in the case of future generations, are presumed to be able to afford it) are being coerced into subsidizing those who cannot and should not be relieved of the consequences of their actions.
As a side not, this notion that "future generations" will have to pay is starting to feel like wishful thinking to me. I'm not certain we'll even be able to successfully finance this level of debt burden in the short term.
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