. A commitment to pay down the
>debt is a commitment to
>reduce demand and slow the economy at a time when
>we really don't know
>where the bottom of the current economic slowdown
>is going to be.
> ----
>what's the reasoning behind that statement?
-If you're going to make this argument, you have to explain why the -U.S. economy grew fairly briskly for years while the deficit was -being turned into a surplus.
The Keynesian based opposition to paying off the debt - and thereby cutting hundreds of billions in yearly transfers to rich bankers - seems kind of missing the point. Deficits only increase demand in the US economy if the money distributed - whether in spending or taxes - is spent on goods made in the US. Given global imports, the impact of deficit spending is unlikely to have the multiplier effects on growth promised by Keynes, at least in the US context.
Coordinated global Keynesian deficits might be a good idea in the context of any global recession, but as US-only policy, it is unlikely to accomplish anything other than making the banks holding government debt richer.
-- Nathan Newman