Niall Ferguson is up to his old antics again. In a Reith Lecture published in the Telegraph he alleging that the recent spike in national debts by the top industrialized western countries is just mortgaging the future of their younger because the younger are going to eventually pay the excesses of the current generation. He is wrong because he is assuming national debt as if it is private debt, that Is, for an individual. This is quite important to note. If an individual has a lot of money owing to someone else and then dies, the burden falls to someone else probably their children. But this isn't the case for an entire economy. The debt created in the economy is money owed to ourselves. So today's debt is going to be owned by our children tomorrow which is debt wed to themselves again. So any problems to be associated with debt are not trans-generational (us and our children) but within- generations (us against us or our children against our children)
Of course high debts have their own problems but not to the levels purported by Ferguson and not greater than the benefits of expansionary expenditure during a recession (which created the debts in the first place). According to Paul Krugman high debts have got problems of distribution and incentives and not a burden of debt as commonly understood (by Ferguson at al). The foreign repayments of debt and interest payments are quite small in the western countries to factor them in especially with the very low rates the bonds are earning and near zero and sometimes negative real interest rates offered by short term bonds.
So Ferguson's analysis is way off course. People like him try to use their command of persuasive language to influence people in accepting their inappropriate views. I consider Ferguson o be a fanatic of archaic views. He is just an example of a policy entrepreneur who is religiously active in advocating policies which aren't supported by facts. It's not only him but there are many others.
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