Debt or Taxes

With a new administration installed in the US and a $1.9trln relief package approved, attention has now turned to how this fiscal largesse will be paid for. I thought this article from September 2020 might add to the debate.

2 thoughts on “Debt or Taxes

  1. Colin, Re-posting on your In The Long Run blog is good, but I think you should do more with it for AIER.

    Calling attention to the quandary governments face to raise tax revenues, one way or another, versus cutting expenditure is an eternally important subject. That the EC/EU wants to harmonize tax regimes across countries is no surprise. The statists always want to kill economic competition in all its forms, including tax policy. That is another topic that is eternally worth while writing about.

    My fear, is everyone decides, the hell with it, let’s just go MMT and print money.

    I am sure you noted my article on money velocity and its relationship to an opportunity cost (the 10 year gov. rate). It went through several reviews by other monetarists and was challenged on many points. It all helped me to strengthen the reasoning about how the yield curve reveals the hidden and more complex opportunity set facing businessmen and entrepreneurs. In the end, they are the active agents to put money to work in the “productive” sector versus the “speculative” sectors. Or, just not borrow at all.


    “Politics, as opposed to science, does not reward the correction of mistakes, given that correcting a mistake also entails admitting to having made one. Worse, the bigger the mistake, the greater the political urgency of defending it at all costs.” (Lionel Shriver)


  2. Dear Greg,

    Thanks for your email. I’m about to read your article this weekend. Re-posting the earlier publication was preparing the ground for my next article on bonds. I suspect, we’re thinking along similar lines and I’m very excited to get your take on what happens to velocity from here. The repo rate hitting -4.5% earlier this month and expectations relating to the rate on deposits at the Fed all point to a potential sea-change.

    As you can probably tell, I’m still wrangling with a bunch of different strands, but hopefully I’ll have something worthy of Jeffery’s perusal before the month end.

    Re doing more for AIER. Please bear with me. I’ve had a number of projects competing for my attention of late. Once I’ve read your article it would be great to schedule a call and discuss this and other topics.

    Best wishes,



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