So you might say any inflationary pressure from increasing the money supply should have already happened? The question is whether to reduce the money supply and income stream by paying off the bonds, keep it going by rolling them over, or remove the interest payment stream while keeping the money supply almost the same by monetizing the debt.
And the interest is by and large around the level inflation is at (sometimes lower, sometimes higher).
And those yield bearing instruments are then left to the boomers' children when they die.
Moreover, if that national debt is being used to pay for national assets like infrastructure, the younger generation get to benefit from that.
If you want to look for intergenerational wealth transfers this isn't the place to look.
Lending someone money doesn't cost you money, it earns you interest. They still have all of that money and generally expect to get it back (to spend it down during their retirement) before they die.
> And the interest is by and large around the level inflation is at (sometimes lower, sometimes higher).
That may be true, but the interest payments are still flowing in a specific direction. One side has a risk-free place to park their money until they want to spend it while not having it eroded by inflation, the other side has to pay the inflation.
> And those yield bearing instruments are then left to the boomers' children when they die.
That is increasingly not happening because people are living longer and consequently having less left over in the end. There has also been an increase in predatory financial instruments like reverse mortgages that prevent that from happening in practice.
> Moreover, if that national debt is being used to pay for national assets like infrastructure, the younger generation get to benefit from that.
Which would be true if it was mostly being used to pay for national assets like infrastructure, but it's mostly being used to expand social security and medicare.
In the case of government bonds, barely.
>That may be true, but the interest payments are still flowing in a specific direction.
Sub-inflation interest payments mean that wealth flows in the opposite direction.
>That is increasingly not happening because people are living longer
Life expectancy has dropped for the 3rd year in a row.
>Which would be true if it was mostly being used to pay for national assets like infrastructure, but it's mostly being used to expand social security and medicare.
I think you misspelled pointless wars, but yes, it would be better if it was spent on infrastructure instead...
Interest on the debt totals nearly $600B/year -- about the same amount we spend on the military.
> Sub-inflation interest payments mean that wealth flows in the opposite direction.
People are paying a premium in order to have a risk-free place to park their money. It's worth something to not have to hoard gold in a hole in your back yard (and pay money to insure it against theft). That cost often gets partially or entirely offset by the return on capital, but it remains a valuable service that they are in fact receiving even when it costs more than the risk-free rate of return.
Meanwhile the taxpayer is still paying ~$600B/year. There is no way to spin that as a profit; it's money that wouldn't have to be paid if we had borrowed less in years past.
> Life expectancy has dropped for the 3rd year in a row.
Basically entirely due to an increase in suicides, and in particular suicides of working-aged people, which makes the problem worse rather than better.
More to the point, it remains the case that the life expectancy today is significantly longer than it was when social security was created, and yet we still have the same retirement age.
> I think you misspelled pointless wars
https://www.nationalpriorities.org/budget-basics/federal-bud...
Have a look at the "Total Federal Spending" chart near the end. The Social Security and Medicare slices are each significantly larger than Military.
> but yes, it would be better if it was spent on infrastructure instead...
But that's the entire point! As it is it's an inter-generational transfer. If the money went to something else -- or even just middle class tax cuts -- then it might not be, but that isn't the case.
The debt to GDP ratio has also been increasing since the end of the Cold War.
> Unlike people, governments don’t have a fixed lifespan, so it’s not like the current generation is going to be on the hook for it when they’re older.
Never paying down the principal doesn't get you out of paying the interest for your whole life. Recapitalizing the interest doesn't do that either, because that's an opportunity cost which could otherwise have allowed for spending or tax relief at the same level of outstanding debt.
And if government spending was perfectly optimal, it will continue to increase to the most productive level possible.
> The debt to GDP ratio has also been increasing since the end of the Cold War.
The principal and the interest are continually repaid and reissued.
Every dollar of public debt is immediately put to use in the economy. Public debt is also incredibly cheap to service. Ideally public debt would always be as high as you could possibly make it, and would be put to the most productive (growth stimulating) use possible. It’s very easy for the government to spend money in a way that offsets the cost of its debt. Now, you could debate how good the government actually is at spending money, but that’s a seperate argument to the economic utility of public debt.
Think about how crazy that is. We were in a multi decade arms race with a super power and after ‘winning’ we never bothered to slow down our military spending.
And that's the big problem here. The policy of "run large deficits funded by residents buying government bonds" effects a large wealth transfer from millennials and post-millennials to baby boomers.