You can try to kill zombie ideas. Or you can try to reframe them.
I'm fed up with killing the "The national debt is not a burden on future generations because they will inherit (sic) the bonds as well as the debt so they will owe it to themselves" zombie. I already killed it a year ago, in six posts: one; two; three; four; five; six. Now Dean Baker (HT Mark Thoma) is again repeating this zombie idea. (Mark, don't you realise it's a zombie?)
Udate: Brad DeLong responds. Dean Baker responds. (Update^2 Mark Thoma responds too). [Update^3 Paul Krugman responds. And I was planning a quiet weekend!] This is great! Finally now, if we can only convince Brad and Dean to work through a simple numerical OLG example (which is what it took to change my own mind 30 years ago), we might finally kill this zombie.
If you really do believe in (Barro-) Ricardian Equivalence, then when you say that the young generation "inherits" the bonds from the old generation, you mean that literally - they inherit the bonds as a freebie. And if so, then OK, the debt really isn't a burden on future generations, but only because the old generation makes sure it isn't a burden by giving the bonds to their kids as a freebie.
But if you don't believe in Ricardian Equivalence, and you think the old generation sells the bonds to the next generation, and then consumes the proceeds from that sale, then don't say that the next generation "inherits" the bonds. They don't inherit the bonds, they damned well pay for them. And if they pay for them, and at the same time pay taxes to pay interest and/or principal on the bonds they have already paid for, then that next generation is paying twice.
Oh God, I don't want to have to argue this all over again! Can I just use the argument from authority? Please? My authority is Brad DeLong. Brad DeLong knows his macro. The very fact that Brad DeLong did not jump all over me last year when I said that Paul Krugman was wrong about the burden of the debt proves that Brad DeLong knows I am right. There is just no way he could have managed to stay silent if he had thought I was wrong!
But what I really want to do in this post is reframe the question. Because, deep inside every zombie, there is something that wants to stay alive.
If monetary policy were doing its job right, and getting Aggregate Demand where it ought to be, nobody would be arguing for bigger deficits to increase Aggregate Demand. Obviously.
Some people might argue for bigger deficits because they thought that the government had some great investment opportunities, where the future benefits of those investments would exceed the costs of future debt. Schools and stuff. That's OK; let's add up the benefits and costs and try to see if they are right.
Some people might argue that the interest rate is below the growth rate, and will stay that way, which means the economy is dynamically inefficient, ponzi schemes are sustainable, and what the economy really needs is a government-run ponzi scheme which really would not be a burden on future generations, because the debt plus interest would be rolled over forever, with no tax increase on any future generation. That's OK too, if you can convince us your assumption is correct.
Some people might argue that future generations will be richer than we are, and we ought to make them worse off to make us better off. Even that's OK. What has posterity ever done for us?
But nobody would have to argue for imposing a debt burden on future generations just to increase Aggregate Demand now. Which means that ultimately it's bad monetary policy that is responsible for that burden of debt on future generations.
And the longer monetary policy stays bad, and the bigger the debt gets, the more worried I get about that future burden. With nominal interest rates near zero, and real interest rates sometimes negative, there is nothing to be worried about right now. But recovery will mean a rise in nominal and real interest rates. If recovery gets postponed much longer, I'm going to start to worry whether (e.g. Japan's) fiscal authorities will be able to afford a recovery.