Abstract

The Burden of the Public Debt

This contribution is to show that - depending on the burden concept employed as well as on divergent assumptions - highly different burden effects may arise from (internal) public indebtedness. It is necessary to differentiate between what must be deemed (1) a real burden on the present or on future generations, (2) a burden on income and wealth and (3) a burden on individual income brackets as a result of changes in income distribution (this latter notion often being overlooked). It is definitely wrong to deem the public debt a burden on future generations in general. This need not be expected to be the case especially where crowding- out effects can be avoided through credit-financed additional demand in situations of underemployment. Tax-financed loan interest and redemption payments do, as a rule, not represent any real burden, although market participants may feel the weight of burdens on their levels of income and wealth. When borrowings are made, shifts in income distribution primarily favour profit income earners, whilst the opposite is likely to be the case with debt repayments.