November 27, 2006
LOGIC DOESN'T GET MUCH MORE CIRCULAR:
In Class Warfare, Guess Which Class Is Winning (BEN STEIN, 11/26/06, NY Times)
The fourth argument in response to my suggestion was that “deficits don’t matter.â€There is something to this. One would think that big deficits would be highly inflationary, according to Keynesian economics. But we have modest inflation (except in New York City, where a martini at a good bar is now $22). On the other hand, we have all that interest to pay, soon roughly $7 billion a week, a lot of it to overseas owners of our debt. This, to me, seems to matter.
Besides, if it doesn’t matter, why bother to even discuss balancing the budget?
Bingo!
MORE:
Save and invest (Kansas City Star, 11/27/06)
Over the past decade, total assets in 401(k) plans have grown from $864 billion to $2.4 trillion, according to the Investment Company Institute.
Foreigners lend us money which we then invest and get a rate of return twice that at which we repay them. There is no economic theory under which that's a bad decision. Posted by Orrin Judd at November 27, 2006 1:19 PM
After your little "bingo", you left out the rest of Stein's paragraph.
Why have taxes at all? Why not just print money the way Weimar Germany did? Why not abolish taxes and add trillions to the deficit each year? Why don’t we all just drop acid, turn on, tune in and drop out of responsibility in the fiscal area? If deficits don’t matter, why not spend as much as we want, on anything we want?
Deficits do matter, we're arguing about how big they have to be before they matter very much.
that's a counterfactual.
we have taxes in order to discipline the governors.
Posted by: oj at November 27, 2006 4:14 PM