Since debt financing is an act of voluntary trade, private investors voluntarily purchase bonds in exchange for the issuer's pledge of a revenue stream coming from user charges or taxes, whichever the case might be. If, then, government expenditure is financed by the issuance of debt rather than by the imposition of current taxes, the burden of debt is shifted to future generations. While the Ricardian and Buchanan views seem, at first blush, to be irreconcilable, they are in fact mutually consistent. If taxpayers consume more in the current period, they shift the burden of government expenditure to future generations. In a world of scarcity, what is consumed now cannot be saved.
Society gets more government projects, more consumption and fewer private investment projects.
That means fewer factories, office buildings and other forms of private capital that create jobs and goods for future generations. If, on the other hand, taxpayers use the same money for saving, they impose the burden of government expenditure on their own generation. They provide the funds needed to maintain private investment projects that would otherwise have, in the previously described consumption scenario, been abandoned. Society gets more government projects, less current consumption and no cutback in private investment projects. Debt financing allows taxpayers to smooth out any big fluctuation of their consumption over time, thus shift part of the burden of government expenditure to the next generation of taxpayers.