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View Diary: Markets hated the tax cuts for the rich (288 comments)

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  •  macroeconomics do not asser that deficits (0+ / 0-)

    don't matter. This is a myth. The argument is for balanced budgets or surplus when the economy is growing and deficits during recessions.

     Its only in the magic land of politics that deficits don't matter (except when they do ...ie starting in Jan 2011)

    Proud Member of the Vast Sanctimonius Wing Conspiracy

    by polticoscott on Fri Dec 10, 2010 at 06:31:07 AM PST

    [ Parent ]

    •  Re (0+ / 0-)

      The argument is for balanced budgets or surplus when the economy is growing and deficits during recessions.

      Yeah, so what happens when you ran massive deficits even when the economy is growing?

      (-5.50,-6.67): Left Libertarian
      Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

      by Sparhawk on Fri Dec 10, 2010 at 09:26:31 AM PST

      [ Parent ]

    •  Well, macroeconomists (at least, Krugman) (0+ / 0-)

      are saying deficits don't matter this year.

      If I could see people like Krugman pushing curves around, and they could show me mathematically what they're talking about, maybe I'd believe them, but, when they make that argument in words, and especially when they're talking about very big, potentially system destabilizing deficits, I think they're leaving out the fact that the only way we can keep running a deficit is if we can keep borrowing.

      We're using to the United States always being able to borrow easily from China, England, the Netherlands, etc., but that's really a luxury. There's no guarantee that we can always keep borrowing money. If we borrow so much money that we exhaust the supply of money that can be affordably borrowed, then I think maybe the mathematics Krugman is using breaks down and the curves go flying across the lecture hall, and we end up with hyperinflation.

      Basically, once the system breaks down, no one will believe that the United States can make good on its obligations, and our currency will have no value. We'll have to replace our monetary system.

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