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Originally Posted by sebastian_dangerfield
If you're suggesting Uncle Sam can borrow cheap and give the money to them, explain who pays off the bonds down the road?
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This is the fundamental disconnect. No one replays the bonds down that road. Instead, the bond shrink relative to a growing economy over the long term as we run balanced or close to balanced budgets when the economy is closer to full employment (Bush administration not withstanding).
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Here's your plan in a formula:
Borrow Cheap long term + [Something magical happens to the economy w/in 20 years] = Win/Win
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The something magical is people (and entities) moving back closer to historical saving rate (i.e., less hoarding of cash) and the economy getting closer to potential.
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Read Stiglitz and Krugman closely and you'll see neither is a true, hard core advocate of more borrowing and stimulus.
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This is true, but Stiglitz has also been embarrassingly wrong lately.
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It's fear of the Austrian reckoning more than anything else
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No, it really isn't. These gentlemen to not believe there is anything credible about Austrian business cycle theory, not least because Austrian predictions over the last four years have proved demonstrably wrong (gee, where's that hyper inflation?).
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And your math, your academic somersaults, offered to suggest we can indebt ourselves out of debt, fall flat.
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I've got to run to a call, but there was a recent excellent blog post on this "how can more debt solve a debt problem" nonsense. I'll find it for you later.
But a key point is that not all debt is created equal, and we, in the U.S., do not have a public debt problem (nor does Spain, nor did Ireland before it took on a ton of private bank debt).
