>On Fri, 5 Jan 2001, Mark Weisbrot wrote:
>
>> If I had to explain the current expansion in a few sentences, I would
>> attribute it to (1) the stock market bubble which generated some
>> trillions of dollars of wealth and therefore hundreds of billions in
>> demand from those enriched and (2) major change in Fed policy 5 and a
>> half years ago, when they abandoned the 6 percent NAIRU and allowed
>> the unemployment rate to fall to 4 percent.
>
>How about the argument the (2) is the crucial mechanism -- that it caused
>a large part of (1) -- and that it was directly related to surpluses?
>I.e., that if we'd been running normal deficits, Fed policy would also
>have stayed the same, i.e., tight? Purely from the view of stimulating
>the economy (and not of needy people who are denied funds, or public
>infrastructure that deteriorates), if the net result is thus a wash
>between deficits and supluses, aren't we better off paying off the debt?
We'd be even better off - in human if not macroeconomic terms - if we had a national health insurance system, publicly funded childcare, free tuition K-PhD, environmental reconstruction, rebuilt slums, etc. Can't do that if your primary fiscal goal is paying down debt.
Doug