Money, Debt and Wealth

Abstract

Over many years, like most economists, I have taught that the national debt differs from personal debt. Since it is owed only to ourselves, it is not a burden to the nation to be subtracted from our assets in measuring our national wealth, by analogy with the necessity of subtracting personal debt in figuring personal wealth. The false analogy has recently surfaced again, though presented as a burden not on ourselves but on future generations, in apparent justification of President Eisenhower’s frowning on the immorality of imposing this burden on our grandchildren. The results of the ensuing debate may be summarised as follows.

I am indebted to my colleague, Professor John Letiche, for improvements in formulation and for the elimination of some mistakes.