Growth Once More: Income And Claims To Wealth

The present chapter returns to secular growth but deals with different titles to wealth: those generated by the domestic sector in the form of securities, equities, bank deposits, pension claims, and the like, as well as direct titles to real property; those created by the government in its role as spender, taxer and borrower; and those coming out of foreign investment. It will be shown that all of these can grow forever but that there is a fundamental difference between public debt creation (deficits) and domestic or foreign investment. This lies in the fact that the latter contribute (if successful) to the national product, while the former has no direct connection. Moreover, domestic and/or foreign investment have a self-adjusting character which is lacking in the case of the public debt, because they respond to rates of return.