Thread by @MacRoweNick

This is wrong.
Debt may (or may not) be a burden on future generations.
Regardless of whether it crowds out investment (or is owed to foreigners).
This is basic OverLapping Generations economics.

https://twitter.com/paulkrugman/status/1180457374705999872

Future generations inherit the tax liability inherent in the debt. (Whether there *necessarily is* a future tax liability depends on whether r>g or r<g.)
Future generations do not *inherit* the bonds; they *buy* those bonds. (Unless you believe in Ricardian Equivalence.)

"Debt is money we owe to ourselves" is only true for a world of infinitely-lived people who never have kids.
Or a world where people *give* (nor *sell*) their kids the govt bonds, because they want to compensate their kids for the future tax liability.

Thought we had all this Burden of the Debt thing sorted out 7 years ago, in the econoblogosphere.
Seems not.
But I'm a bit tired.
Because I'm just back from a lovely big US road trip (9,000kms, 18 days, 14(?) states, one wheel bearing needed replaced.)

So I will just link to an old post, newly relevant:
worthwhile.typepad.com/worthwhile_can…

If you want to defend current (US) levels of debt&deficits:
Don't say "Debt is money we owe to ourselves";
Because that is only true in a world of infinitely-lived agents/dynasties & Ricardian Equivalence (which Paul rejects, and he can't have it both ways).
Instead.....

Instead say "R<g, so we don't need to raise taxes on future generations to service the debt, and can rollover the debt+interest, with falling debt/GDP, so it's sustainable".
BUT....

BUT, even in the r<g case, you gotta be a true economist and remember the difference between *average* vs *marginal* benefits & costs.
Debt *can* create an average benefit but *marginal cost* on future generations. It depends.
Old post:
worthwhile.typepad.com/worthwhile_can…

Even if r<g, will *extra* debt create a *marginal* tax burden on future generations?
It depends:
on the elasticities;
plus (more obviously) on what the debt is spent on (investments for the kids?)
Think about those elasticities.
Forget the "We owe it to ourselves" BS.

The idea that you can transfer consumption goods from future unborn generations to the current generation (without reducing investment, or increasing debt to foreigners) sounds like Time Travel.
But with OverLapping Generations:
worthwhile.typepad.com/worthwhile_can…

It's like taking food away from vegetarians (who eat only veggies) and giving it to carnivores (who eat only meat).
It sounds impossible.
But it's easy: you just swap the veggies for meat with the OverLapping Group of omnivores (who eat both).