You should listen Diane Rehm's show today. Naked Keynesian Jamie Galbraith was there!
http://thedianerehmshow.org/audio-player?nid=13732
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He made a couple of really good points about the size and magnitude of the deficit when he said that much of the debt is held by other departments of our own government.
ReplyDeleteAdditionally all of our debt is held in OUR currency, unlike other countries debt which isn't held in their currencies, but rather, Our currency.
Another interesting point was that many are worried about the potential interest we will have to pay on our debt. It is just that, potential interest. Right now our interest rate is at essentially 0%, due to the lack of real inflation the Fed has no real need to raise that rate. Why not borrow at 0%, when you put the money into the economy (in smart places) it gets passed around with the multiplier effect
Exactly! Those are the central points, debt in your own currency at low interest rates, when you need to borrow to get out of a recession is not a bad thing. Dean Baker also noted today that, contrary to what many say, the US government is not broke. The link is here http://www.cepr.net/index.php/blogs/beat-the-press/the-republican-leadership-commits-huge-gaffe-and-npr-doesnt-notice
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