Saturday, January 12, 2013

Federal Debt is not necessarily stealing from future generations

Federal debt is borrowing from current generations who have savings. Future generations don't have any money yet.

If we have to print money and inflate our way out of debt, it's current generation's savings and assets that will be affected. Future generations don't have anything to loose yet. If inflation means that the dime becomes the new penny and the ten dollar bill becomes the new one dollar bill, future generations aren't going to know the difference. They will just be born into a world where the penny is silver colored instead of copper and they will just build from there. Maybe they'll still call it a penny as the dime can be renamed the penny.

It's current generations who have saved money in today's dollar that will loose value. Inflation is less of a problem to folks yet unborn as they can just pick up where we left off. Today's dollar is worth less than the dollar of the 1930s, but modern life is still richer than the 1930 in many ways at least. They didn't have MP3 players or Google in the 1930s. Some folks might have preferred the life of the 1930s to now, for instance when one could fish without a fishing license and the world was less crowded, but that doesn't have to do with the dollar's value.

Generations not yet born will not notice the difference if there is across the board inflation before they arrive. They'll just be used to using the dime as the penny, but of course transactions are often by computer these days; rather than using coins.

Inflation is a problem for current people, especially people with savings.

Now, maybe future folks who would stand to inherit lots of money will be diminished if those assets are affected, but I'm not too worried about that.

Across the board inflation isn't really a problem for people who are not yet born, but there is one problem. Inflation is uneven across the economy. That's a big problem. Some things are inflating terribly while other things hardly inflate at all. This "shearing" in the economy could effect future generations, but folks born in future times will have to fix these kind of problems so the economy continues to work. Hopefully these problems are being addressed now, so we, who are alive today, can continue to function as well.

Our most important gift to future generations is simply a world that is livable. The debt isn't stealing from them, if anything, it's stealing from people alive today.

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