On May 18, 2009, at 3:34 PM, Max B. Sawicky wrote:
MBS: You were talking about no-crowding out and the increased wealth of the rich. Now you're talking about the increased wealth of foreigners.
You were talking as if there were just two options for "the rich" - gov debt, and other securities. But if gov debt is an add-on, then it's not an either-or.
O.K. let's sail to Open Economy Land. I claim, with no deficit finance, public spending in the present decreases, to the net disadvantage of the non-rich.
Really? In the actual world we're living in, the expanded deficits of the 1980s and 2000s came from tax cuts for the rich and increased military spending. If that's to the benefit of the non-rich, I'm Marie Queen of Romania.
I also claim there is little impact on future non-interest spending because future interest payments for any given, fixed increase in debt are an ever-decreasing share of GDP and tax revenue.
But they're not. By any reasonable projection, debt and debt service are going to rise as a share of GDP for a long time to come.
MBS: You example goes to GOP policies, not deficit finance in general. This year and next year we'll see a big non-defense spending surge.
Yeah. And a lot of it is going to Goldman Sachs. And, as you say, Afghanistan.
I'm not saying that the stim bill is bad - it's the best we could do under the circs. And the bailout, as botched as it is, is necessary in some sense. But if we want to talk about ideal worlds, why not be really serious? Tax the rich, don't borrow from the mofos.
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