Debt Taken On By Fools


It is often touted that total debt carried by a government, or total debt in general, does not matter because debt is one person’s liability and another's asset thus a zero-sum game. This is plugged most loudly by Paul Krugman in an attempt to explain why the enormous debts of nations such as the United States and Japan do not matter. Nothing could be further from the truth.

For example consider a productive farmer and an adjacent town full of people. The townspeople accept the farmers’ food but do not repay the farmer using money earned by providing production and services; they pay him back with IOU’s also known as debt.