<p>The Quebec debt reduction Generations Fund is hilarious...</p>
<blockquote>
<p>alternative sources of revenue were chosen that are allocated
exclusively to the Fund. The Fund's main revenue source is water-power
royalties paid by Hydro-Québec and private producers of
hydroelectricity. Other revenue sources are mining revenues, the
specific tax on alcoholic beverages, and investment income generated
by the Fund itself</p>
</blockquote>
<p>The quote is from <a href="https://en.wikipedia.org/wiki/Generations_Fund" rel="nofollow noreferrer">Wikipedia</a>.</p>
<p>A government has the power to regulate its income and expenses through intentions and policies and law.</p>
<p>A government can create a pocket for money and label the pocket the &quot;Generations Fund&quot; and use its power to try to be faithful to an intention to allocate to that pocket the income from specific sources and with the intention to make expenditures out of that pocket for a specific expense.  The specific expense might be interest and principal payments on a specific debt.
 
Since the government continues to have power to regulate its income and expenses, it also has the power to ensure that it &quot;fails&quot; to live up to its earlier intentions.  For example, the government can change intentions and policies and laws or a government can lose an election and be replaced.</p>
<p>If pockets make debt reduction inevitable, then the most indebted people would be wearing the pants that have the most pockets.  Since pocket proliferation is funny and governments are a reliable source of comedy, I am sure joke governments other than Quebec's do similar things.</p>
<p>For example the <a href="https://en.wikipedia.org/wiki/Social_Security_Trust_Fund" rel="nofollow noreferrer">United States Social Security Trust Fund</a> is an example of another pocket. It's funded by social security payroll tax and it pays social security obligations as they occur, which means it's a periodic debt.</p>
<blockquote>
<p>The Trust Fund is required by law to be invested in non-marketable
securities issued and guaranteed by the &quot;full faith and credit&quot; of the
federal government.</p>
</blockquote>
<p>The government is saying that the only paper (securities) they will put into this pocket is paper that promises to pay the owner of the paper some amount of money from the issuer of the paper, and by the way, the issuer of the paper also happens to be the owner of the paper. This would be even funnier than what Quebec does if it were not for the fact that people openly talk about how this &quot;fund&quot; is <a href="https://www.forbes.com/sites/ebauer/2018/05/05/the-social-security-trust-fund-is-real-but-so-what/?sh=271e5b873c4a" rel="nofollow noreferrer">not an actual advance funding of future expenses and it's not even close</a>. I imagine Quebec politicians are earnest so I'm ROTFL.</p>
<p>Multiple pockets are welfare destroying.  For example, suppose Taiwan has 2 pockets. One is called the general pocket and the other is called the Mars mission pocket. I am supposing that Taiwan has the ambition to pay for a mission to Mars and the income for the Mars pocket is specifically the revenue from taxing alcohol.  If China attacks Taiwan, money from the Mars pocket wouldn't be available for defense of the country.  It wouldn't be available because if you can read you would be able to understand that the pocket is clearly labelled &quot;Mars&quot;. Thus we can see that multiple pockets destroys welfare because the welfare of the Taiwanese is diminished in such a situation.  That would be hilarious although it would be sad if they are invaded. I doubt if this will happen because I am not aware of the government of Taiwan being a big joke like the government of Quebec.</p>

CC BY-SA 4.0
2023-10-13T12:34:12.880Z
Thanks for your comments. Through your comments, I now understand why they created the fund and I think that the idea of creating a pocket called generations fund was actually an excellent idea. It has nothing to do per se with the economy, but with transparency. When it was created, the public was really worried about the debt. Hence, by creating the fund, it showed that the government listens to the people .This fund gave the public a better debt monitoring process.
Denis Pageau-Sociétalogue
CC BY-SA 4.0
2023-10-13T14:17:07.197Z
The income of the Generations Fund is partly the result of the initial choice to include an alcohol tax and mining royalties. Why do you want somewhat random effects like fluctuations in the success rate of geologists to affect the thing that you want to monitor? Why do you want the Fund's income to be less if people decide alcohol is unhealthy? Monitoring the Generations Fund is inferior to monitoring the debt directly, for example, by measuring the debt / gross provincial product ratio.
H2ONaCl
CC BY-SA 4.0
2023-10-13T14:38:42.477Z
You wrote:  "Monitoring the Generations Fund is inferior to monitoring the debt directly."  Please remember that I did not say that the government would stop measuring the debt / gross provincial product ratio. Hence I don't understand why you say that it's inferior. How can having two types of informations on the debt be inferior?
Denis Pageau-Sociétalogue
CC BY-SA 4.0
2023-10-13T15:43:08.440Z
Problems have already been mentioned. Welfare reduction, random geology and societal lifestyle changes affecting your measurement, and other things that will occur to you if you think about it. If Quebec "wins the lottery" why would you want the debt to be unaffected just because of some earlier decisions about how to reduce it. When circumstances change; make changes.  Don't follow silly old rules. If you want to have transparency and debt monitoring, just have transparency and debt monitoring. There is no need to do silly things.
H2ONaCl
CC BY-SA 4.0
2023-10-13T15:47:41.040Z
Maybe economists think this is silly, but I think that when it is time to help citizens understand the various actions on this, it is a useful tool. PS, I sense you do not like government or you fill that they are completely incompetent. To give such an extreme example and think that politicians would not adapt is a form of fallacy and is misleading.
Denis Pageau-Sociétalogue
CC BY-SA 4.0
2023-10-13T16:03:45.643Z
If the government adapts, then the Generations Fund becomes Generations Fund version 2.0 and 3.0 and 3.1.  This inconsistency would diminish it as a measurement tool and makes it inferior to the debt-to-GDP ratio.
H2ONaCl
CC BY-SA 4.0
2023-10-13T16:38:32.993Z
The Fund was not created to help citizens understand. The Fund was created to create the illusion of progress in debt reduction.  The public is easily deceived. It was also created by a government in an attempt to constrain its future self, whether the future self is the same government in the near future or a different government after an election.  It's like an overweight person putting a combination lock on a refrigerator to make eating inconvenient.  Constraints are welfare reducing.
H2ONaCl
CC BY-SA 4.0
2023-10-13T16:39:58.570Z
Constraints also serve to make other parties look bad if the time comes that there is a need to adjust.  Politicians value illusions of progress and making other parties look bad.
H2ONaCl
CC BY-SA 4.0
2023-10-13T18:28:35.450Z
I don't want to have an extended discussion on this subject. Hence, I want to thank you for your contribution. Hope you participate on other subject matters.
Denis Pageau-Sociétalogue
CC BY-SA 4.0
2023-10-13T05:29:26.957Z
2023-10-14T10:19:20.213Z
2023-10-14T10:19:20.213Z
H2ONaCl
<p>In Canada, the Province of Quebec created a <a href="https://en.wikipedia.org/wiki/Generations_Fund" rel="nofollow noreferrer">generations fund </a> in 2006 in order to reduce the debt.</p>
<p>As of March 2023, Québec’s net debt stands at $206.8 billion, or <a href="http://www.budget.finances.gouv.qc.ca/budget-en-chiffres/en/March-2023/About-Budget-by-the-numbers/" rel="nofollow noreferrer">37.4% of GDP.</a>.</p>
<p>Do you know if any other country or state uses this approach?</p>

CC BY-SA 4.0
2023-10-11T18:27:23.187Z
Do we like what?
smcc
CC BY-SA 4.0
2023-10-11T19:26:28.797Z
The idea of a generations funds to reduce the debt?
Denis Pageau-Sociétalogue
CC BY-SA 4.0
2023-10-12T08:16:44.340Z
@DenisPageau-Sociétalogue for the future on this site opinion based questions like “do you like x” or “do you think y” are off topic on this site. Questions here should be always answerable using facts theories or scientific research on this site… questions of the type do you like x cannot be answered scientifically or with facts or research. I saw that Giskard already edited your answer to fix it, please next time avoid that kind of questions here  . See our help center for our rules or take a tour of the site to understand our model
1muflon1
CC BY-SA 4.0
2023-10-13T09:04:06.350Z
Why on earth does the Canadian government allow its Quebec province to be in debt? Seems utterly insane for the central gov not to take on those liabilities.
Jamie Smith
CC BY-SA 4.0
2023-10-13T12:17:04.927Z
Where do you come from Jamie?
Denis Pageau-Sociétalogue
<macroeconomics><taxation><government-debt>
A generations funds to reduce the debt
Denis Pageau-Sociétalogue
# A generations funds to reduce the debt

(Asked by: username_0 on 2023-10-10)

In Canada, the Province of Quebec created a [generations fund](https://en.wikipedia.org/wiki/Generations_Fund)  in 2006 in order to reduce the debt.

As of March 2023, Québec’s net debt stands at $206.8 billion, or [37.4% of GDP.](http://www.budget.finances.gouv.qc.ca/budget-en-chiffres/en/March-2023/About-Budget-by-the-numbers/).

Do you know if any other country or state uses this approach?

**Tags:** macroeconomics, taxation, government-debt

> **Comments:**
> **username_1**: Do we like what?  
> **username_0**: The idea of a generations funds to reduce the debt?  
> **username_2**: @DenisPageau-Sociétalogue for the future on this site opinion based questions like “do you like x” or “do you think y” are off topic on this site. Questions here should be always answerable using facts theories or scientific research on this site… questions of the type do you like x cannot be answered scientifically or with facts or research. I saw that Giskard already edited your answer to fix it, please next time avoid that kind of questions here  . See our help center for our rules or take a tour of the site to understand our model  
> **username_3**: Why on earth does the Canadian government allow its Quebec province to be in debt? Seems utterly insane for the central gov not to take on those liabilities.  
> **username_0**: Where do you come from Jamie?  

---

## 1 answers

### Answer by username_4 on 2023-10-13. Score: 0

The Quebec debt reduction Generations Fund is hilarious...

> alternative sources of revenue were chosen that are allocated
> exclusively to the Fund. The Fund's main revenue source is water-power
> royalties paid by Hydro-Québec and private producers of
> hydroelectricity. Other revenue sources are mining revenues, the
> specific tax on alcoholic beverages, and investment income generated
> by the Fund itself

The quote is from [Wikipedia](https://en.wikipedia.org/wiki/Generations_Fund).

A government has the power to regulate its income and expenses through intentions and policies and law.

A government can create a pocket for money and label the pocket the "Generations Fund" and use its power to try to be faithful to an intention to allocate to that pocket the income from specific sources and with the intention to make expenditures out of that pocket for a specific expense. The specific expense might be interest and principal payments on a specific debt.
 
Since the government continues to have power to regulate its income and expenses, it also has the power to ensure that it "fails" to live up to its earlier intentions. For example, the government can change intentions and policies and laws or a government can lose an election and be replaced.

If pockets make debt reduction inevitable, then the most indebted people would be wearing the pants that have the most pockets. Since pocket proliferation is funny and governments are a reliable source of comedy, I am sure joke governments other than Quebec's do similar things.

For example the [United States Social Security Trust Fund](https://en.wikipedia.org/wiki/Social_Security_Trust_Fund) is an example of another pocket. It's funded by social security payroll tax and it pays social security obligations as they occur, which means it's a periodic debt.

> The Trust Fund is required by law to be invested in non-marketable
> securities issued and guaranteed by the "full faith and credit" of the
> federal government.

The government is saying that the only paper (securities) they will put into this pocket is paper that promises to pay the owner of the paper some amount of money from the issuer of the paper, and by the way, the issuer of the paper also happens to be the owner of the paper. This would be even funnier than what Quebec does if it were not for the fact that people openly talk about how this "fund" is [not an actual advance funding of future expenses and it's not even close](https://www.forbes.com/sites/ebauer/2018/05/05/the-social-security-trust-fund-is-real-but-so-what/?sh=271e5b873c4a). I imagine Quebec politicians are earnest so I'm ROTFL.

Multiple pockets are welfare destroying. For example, suppose Taiwan has 2 pockets. One is called the general pocket and the other is called the Mars mission pocket. I am supposing that Taiwan has the ambition to pay for a mission to Mars and the income for the Mars pocket is specifically the revenue from taxing alcohol. If China attacks Taiwan, money from the Mars pocket wouldn't be available for defense of the country. It wouldn't be available because if you can read you would be able to understand that the pocket is clearly labelled "Mars". Thus we can see that multiple pockets destroys welfare because the welfare of the Taiwanese is diminished in such a situation. That would be hilarious although it would be sad if they are invaded. I doubt if this will happen because I am not aware of the government of Taiwan being a big joke like the government of Quebec.

> **Comments:**
> **username_0**: Thanks for your comments. Through your comments, I now understand why they created the fund and I think that the idea of creating a pocket called generations fund was actually an excellent idea. It has nothing to do per se with the economy, but with transparency. When it was created, the public was really worried about the debt. Hence, by creating the fund, it showed that the government listens to the people .This fund gave the public a better debt monitoring process.  
> **username_4**: The income of the Generations Fund is partly the result of the initial choice to include an alcohol tax and mining royalties. Why do you want somewhat random effects like fluctuations in the success rate of geologists to affect the thing that you want to monitor? Why do you want the Fund's income to be less if people decide alcohol is unhealthy? Monitoring the Generations Fund is inferior to monitoring the debt directly, for example, by measuring the debt / gross provincial product ratio.  
> **username_0**: You wrote:  "Monitoring the Generations Fund is inferior to monitoring the debt directly."  Please remember that I did not say that the government would stop measuring the debt / gross provincial product ratio. Hence I don't understand why you say that it's inferior. How can having two types of informations on the debt be inferior?  
> **username_4**: Problems have already been mentioned. Welfare reduction, random geology and societal lifestyle changes affecting your measurement, and other things that will occur to you if you think about it. If Quebec "wins the lottery" why would you want the debt to be unaffected just because of some earlier decisions about how to reduce it. When circumstances change; make changes.  Don't follow silly old rules. If you want to have transparency and debt monitoring, just have transparency and debt monitoring. There is no need to do silly things.  
> **username_0**: Maybe economists think this is silly, but I think that when it is time to help citizens understand the various actions on this, it is a useful tool. PS, I sense you do not like government or you fill that they are completely incompetent. To give such an extreme example and think that politicians would not adapt is a form of fallacy and is misleading.  
> **username_4**: If the government adapts, then the Generations Fund becomes Generations Fund version 2.0 and 3.0 and 3.1.  This inconsistency would diminish it as a measurement tool and makes it inferior to the debt-to-GDP ratio.  
> **username_4**: The Fund was not created to help citizens understand. The Fund was created to create the illusion of progress in debt reduction.  The public is easily deceived. It was also created by a government in an attempt to constrain its future self, whether the future self is the same government in the near future or a different government after an election.  It's like an overweight person putting a combination lock on a refrigerator to make eating inconvenient.  Constraints are welfare reducing.  
> **username_4**: Constraints also serve to make other parties look bad if the time comes that there is a need to adjust.  Politicians value illusions of progress and making other parties look bad.  
> **username_0**: I don't want to have an extended discussion on this subject. Hence, I want to thank you for your contribution. Hope you participate on other subject matters.  

---

