“As long as the debt service is a manageable percent of the GDP there is no good reason to pay it off.”
This is a boom economy. All booms go bust.
The interest on the debt may take over 50% of individual income tax during a weak economy.
“Investors like the guaranteed return on Treasury paper, which is what the national debt is composed of.”
People like me buy that indirectly through the banks.
We are getting tired of the low returns and are running down our bank balances.
My money and your cheap debt financing are disappearing.
“The interest on the debt may take over 50% of individual income tax during a weak economy.”
For that prediction to come true, debt service would have to be nearly 20% of GDP- 20% of GDP being the level that federal tax receipts have consistently run since 1945. Hauser’s law.
Nothing remotely like that has ever happened. Interest payments as a percentage of GDP reached their highest level ever in 1991, and that was 3.16% of GDP. It was 1.34% of GDP last year.
“We are getting tired of the low returns and are running down our bank balances. My money and your cheap debt financing are disappearing.”
And that has absolutely nothing to do with your wealth tax theory. It’s a consequence of a global savings glut and very low inflation. We had double digit interest rates in the late 70s, early 80s as a consequence of high inflation and a low savings rate.