Public debt — an economic necessity

26 September, 2017 at 09:06 | Posted in Economics | 6 Comments

wvickreyWe are not going to get out of the economic doldrums as long as we continue to be obsessed with the unreasoned ideological goal of reducing the so-called deficit. The “deficit” is not an economic sin but an economic necessity. […]

The administration is trying to bring the Titanic into harbor with a canoe paddle, while Congress is arguing over whether to use an oar or a paddle, and the Perot’s and budget balancers seem eager to lash the helm hard-a-starboard towards the iceberg. Some of the argument seems to be over which foot is the better one to shoot ourselves in. We have the resources in terms of idle manpower and idle plants to do so much, while the preachers of austerity, most of whom are in little danger of themselves suffering any serious consequences, keep telling us to tighten our belts and refrain from using the resources that lay idle all around us.

Alexander Hamilton once wrote “A national debt, if it be not excessive, would be for us a national treasure.” William Jennings Bryan used to declaim, “You shall not crucify mankind upon a cross of gold.” Today’s cross is not made of gold, but is concocted of a web of obfuscatory financial rectitude from which human values have been expunged.

William Vickrey

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6 Comments

  1. The problem is the label.

    In reality if we can do it, we can afford it. Something we learn time and again every time there is a war to fight, nuclear submarines to buy or a bank to bail out.

  2. Länken verkar inte fungera.

    • Fixad. Tack 🙂

  3. Not only is public debt a necessity, it should be a REVENUE EARNER (i.e. NEGATIVE YIELDS/INTEREST) for the monetary sovereign to avoid welfare proportional to account balance with the shortest maturity (account balances at the central bank) costing the most.

  4. Alexander Hamilton once wrote “A national debt, if it be not excessive, would be for us a national treasure.”

    Did Hamilton — or Vickrey, for that matter — discuss how to determine whether the national debt is “excessive”? That seems to be a sticking point.

    One could say it is “obviously not” excessive because the problems debt would solve have not been solved. But that is circular.

  5. Fifteen Fatal Fallacies of Financial Fundamentalism
    A Disquisition on Demand Side Economics
    William Vickrey
    October 5, 1996
    http://www.columbia.edu/dlc/wp/econ/vickrey.html


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