Forced loans
To illustrate the folly of tax rebates funded by public debt, I though it might be interesting to use a metaphor of "forced" loans. Imagine if, under the pretense of "stimulating the economy", the government took out a loan on your behalf at the local bank and posted you the cash proceeds. What would one think?
Likely a mixture of anger at having one's personal financial affairs violated, combined with bafflement as to how one is expected to feel "better off" or be inclined to spend more when all that has happened is some money juggling. The first course of action would probably be a trip to the bank with one's borrowed money in hand to pay off a forced loan that one did not want or need.
Yet this bizarre scenario is endorsed by many politicians and economists of late, as a remedy for busted bubbles, market collapse and poor reelection prospects.
But what complicates the matter greatly and turns the situation from a bizarre but amoral happening into an immoral arbitrary wealth redistribution exercise, is the intergenerational burden that the issue of government debt creates. For any man that gets his tax rebate cheque, then spends it and promptly dies shortly afterwards will never have to pay his forced loan back. Yet the child born that day will have to pay more taxes through its life to pay for the arbitrary consumption granted to the man that just died. The longer time that is spent without paying off the debt, the greater the disconnect between those who get to enjoy excess consumption and those end up paying for it.
