Do We Owe Our Debt to Ourselves? Senior Editor, CNBC.com Beneath
a great many debates about politics and economics is a question
of how we are to pay for the costs of being social animals. Or,
as Lenin put it: who, whom? This comes up in debates about
government debt. Some people worry that we are burdening future
generations with the costs of our current projects because we
are promising that they will pay for them. Others say that there
is no burden because, well, we owe it to ourselves. Paul Krugman
of the New York Times recently argued for the latter view:
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.
He includes this chart graph to show that, despite what you
might hear about China financing our deficits, most of our debt
is lent by domestic