[aswanson]

So has putting it all on black in Vegas, alcohol, and any other number of statistically proven vices. At least investment has some measure of upside. But yeah, I'd like the $n trillion in debt government tell me how to manage my money.

[jjoonathan]

The government that is able to borrow money at an interest rate lower than inflation? Yeah, they probably could tell you (and me) a thing or two about how to manage money.

[eru]

They should borrow all the money and invest in an index fund. (Only semi-serious.)

[jjoonathan]

That doesn't sound right, but I don't know enough about how sovereign debt works to dispute it.

I suspect that the failure mode would be that it would inhibit the US government's ability to continue to borrow at such rates.

[eru]

I concur, I think there's something wrong with a big nation doing this. (Smaller nations run sovereign wealth funds all the time.)

The FED (more or less) sets the interest rates that the US government has to pay; though if they tried to buy everything, we would see inflation. I suspect the actual failure mode is a different one: real wealth is limited by productivity. If the government is buying all the stocks, we have just shifted ownership around, but don't actually increase productivity. Productivity might even drop, because the government is probably not a good activist shareholder.

For real estate, there's a decent argument to be made that the government should buy it all, and lease it out for a few decades at a time to the highest bidder.