Dr. Martin Hash Podcast

Government has its own accounting rules that don't include pensions & other future obligations among their liabilities. Their illogic goes: legislators can always vote not to pay the benefits, therefore those debts don't really exist. That concept is factually true but it does mislead rational people into drawing the wrong conclusions about our nation's sustainability. There's also the salient fact that accounting is NOT economics. Accounting is making the assets equal the liabilities, while the goal of economics is to increase productivity to the point where people only have to work enough to maintain a Work Ethic, using the rest of their time to pursue personal achievements. The goal of Government should be economics, not accounting.

From a simple accounting perspective, Government creates a debt spending money, which it tries to balance through taxation. The federal government can also create new money to pay its debts, and there's nothing wrong with that from an economic POV, though it causes accountants and Home Budget Balancers everywhere to go nuts. However, creating money has the downside of devaluing future assets, like pensions, so there's a lot of pushback from the vested interests, mostly people who are consumers of public largess rather than contributors to it, so the increasing productivity goal of economics means nothing to them, but it should mean something to their grandchildren.