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On the needed quantity of government debt.

We need to change our way of thinking regarding government debt. First, the government debt that a country owes to its citizens is not debt in the usual sense of the word. This form of government debt is a mechanism that facilitates intergenerational borrowing and lending, and is an integral part of a welfare-improving saving-for-retirement system.

Second, because of changing demographics, the quantity of government debt needed in a saving-for-retirement system is becoming large. The number of retired workers is growing because people are living longer and population growth has slowed in most of the advanced industrial countries. With these demographics, large government ...

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