Quote from: RoadTrain on September 20, 2014, 11:39:00 AM

Quote from: zorke on September 20, 2014, 03:10:16 AM

Quote from: RoadTrain on September 18, 2014, 07:59:17 PM

Quote from: zorke on September 18, 2014, 05:05:12 AM

Quote from: RoadTrain on September 16, 2014, 08:37:55 AM

Quote from: 51percemt on September 16, 2014, 03:50:37 AM

All money that government spends does eventually need to be paid for by taxpayers. Even if the government never pays back the debt they incur to spend this money the government will need to have otherwise higher taxes in order to service the debt forever.

All of you suggestions for government to spend money on other things (science, medicine, education, ect) could be more efficiently done in the private sector.

I suggest you reading Modern Monetary Theory basics, which explain why government debt doesn't matter in the modern (fiat) monetary system.
If you go deep enough, you'll get what I mean here.

This is only an economic theory. What it fails to account for is the fact that government borrowing must be offset by a less amount of lending in the private sector.

What does it mean? Care to elaborate?

For every dollar that is lent to the government, there is one less dollar that can not be lent to the private sector or invested in the private sector. I agree that US government bonds are treated almost like cash, however there is a limit as to how much these bonds can be borrowed against.

Wrong, government borrowing doesn't crowd out private investment per se. Government borrowing is a vertical transaction, while private investment is horizontal.

There's an article explaining this fallacy in simple words.
http://econrevival.blogspot.ru/2013/10/crowding-out-and-its-relation-to.html

If government borrowing does not crowd our private investment then there would be no need for credit ratings for governments because it would be assumed that the debt would be paid back because they can borrow unlimited amounts without consequence to the private sector.