Some Deficit Hawk Lies About the National Debt

Tulio is worried about the national debt, for no good reason. He’s been reading too many articles in the corporate media:

I agree with most of Reich’s article, but I don’t agree with him on raising the debt ceiling. The debt is out of control and the fed is printing money like there’s no tomorrow. If we weren’t the world’s default reserve currency (for now anyway), we’d be royally fucked.
We need not just a tax on the elite’s income, but we need a tax on wealth perhaps. For the super rich, their income is only a small part of their wealth. Their lawyers are paid very well to hide their wealth from taxes.

Poor Tulio’s been brainwashed here. He’s repeating one lie after another.
The debt is out of control…
Nope, not at all; in fact, it is quite low; but the deficit is high, and if high deficits continue, the debt will slowly worsen.
…the fed is printing money like there’s no tomorrow.
Good for them. This is what Central Banks are for, no? The major risk you run in printing money is the risk of inflation. At the moment, the risk of inflation is precisely zero. In fact, we have the opposite risk, one of deflation.
If we weren’t the world’s default reserve currency (for now anyway), we’d be royally fucked.
LOL, and why is that? We’d be royally fucked because we have the 2nd lowest debt in the industrialized world? Explain.
The national debt is nothing at the moment. It’s the 2nd or 3rd lowest debt in the Industrialized World at 71% of GDP. All this worry about the debt is simply crap.
The debt ceiling is raised every year. It’s a technicality.
However, the deficit is pretty high, I must admit. It’s 20% of GDP. The deficit is for the most part being caused by the bailouts, the various tax cuts, the various corporate giveaways and mostly by the terrible economy, and primarily by the financial crisis in which the financial sector is saddled with bad debt and won’t lend money. The deficit will apparently continue for as long as the economy sucks. I’m not worried about the deficit for the time being, but if it keeps going like this, there’s going to be a problem at some point.

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0 thoughts on “Some Deficit Hawk Lies About the National Debt”

  1. I’m not convinced at all.
    More and more of our debt being owned by foreign nations that are hostile to our interests does not make me sleep well at night. Plus if you think it’s great that the fed just turns on the printing presses whenever he wants, what do you think that’s going to do to our ability to borrow more? What if I borrowed $10,000 from you and then paid it back with inflated money? I’m probably going to stop lending you money. Why do you think the Fed’s latest “quantitative easing” pissed so many countries off? And who the hell elected Ben Bernanke? http://www.youtube.com/watch?v=PTUY16CkS-k

    1. More and more of our debt being owned by foreign nations that are hostile to our interests does not make me sleep well at night
      Doesn’t inspire me with confidence or joy, either.

  2. Dear Robert
    The Japanese government debt is a whopping more than 200% of GDP, but only about half of that is public debt and the other is “owed” to the Japanese Central bank. Yet, there is no inflation in Japan and interest rates are very low. The Japanese experience proves your point that deficit spending is not necessarily inflationary.
    Also, evaluating government debt only in terms of its percentage of GDP is superficial. We sould also look at interest rates. A debt of 500 with an interest rate of 6% is the same as a debt of 1000 with an interest rate of 3%. Government debt doesn’t have to be repaid. It can be refinanced as long as creditors have confidence, which they won’t lose as long as the debt does not grow much faster than GDP for many years in a row.
    Regards. James

    1. This is class war pure and simple whether you want to call it that or not. The economic elite will keep relentlessly pushing to get a larger % of the economic pie, even though 4/5 of the increase in income during the past twenty years already went to them. 2% of the population now own 30% of the wealth. The elite’s greed is insatiable. Economic inequality has reached banana republic levels in the US. I really don’t understand why ordinary Americans are not fighting back more vigorously.

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