Sunday, July 21, 2013

Why Government Securities Are The Safest

Because of two things it can do that private corporations cannot. The first one is to collect taxes and the second one is to print money. So that if a big payment is due the state can always raise income or corporate taxes or have its adviser -- the Bank of Mauritius -- order a container of the good stuff from Thomas de La Rue. But you don't want to play with these levers for day to day matters. Or to compensate for dumb policies. Nope. You want to design policies that are at least sustainable if not thoughtful.

Still these two trump cards puts government in a very strong position to undertake the biggest projects. Which is why, for example, it used to produce all of our electricity through one of its manifestations.

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