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by lokar 65 days ago
There are really 4 possible positions on deficit spending:

- it does not matter at all, as long as inflation is under control (MMT)

- it's fine, as long as the long run average is ~zero (a cyclic argument)

- it's fine, as long as the long run average is a small stable % of GDP

- we have to balance the budget every year, no matter what

I don't think any serious person holds the last position.
3 comments
oa335 65 days ago
> it's fine, as long as the long run average is a small stable % of GDP

I think this is theoretically viable only if debt % is lower than growth rate. Recently US debt % of GDP has been higher than growth rate.

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MattGaiser 65 days ago
A lot of US states and municipalities work that way. Can argue whether it is wise, but it is certainly common.
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estimator7292 65 days ago
Most US states are not global superpowers with hundreds of millions of citizens.

The scale is completely different. Economics do not simply scale up and down, the math changes drastically when the numbers get bigger.

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NoMoreNicksLeft 65 days ago
>The scale is completely different.

Yes, the scale is different. This means that the debt problem can go on for far longer without being apparent. It can even be put off until the current slate of politicians are out of office, until they're dead of old age and beyond accountability. Scale can hide things, by making them so big your field of vision doesn't allow you to see it all at once.

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NoMoreNicksLeft 65 days ago
>I don't think any serious person holds the last position.

And yet, that's the only position that (were it followed) would see us free from ruinous debt. What are we paying in interest every year again?

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