Galbraith's response what that flat out there is no evidence to support it. What? What about Rogoff/Reinhart's "This time it's different"? That book and its research reiterates the debt/GDP ratio rule of thumb that is taken very seriously, and has filtered out to the mainstream very effectively via Peterson, etc...
Why didn't Galbraith acknowledge that research? Is it rogue research or obviously flawed?
Doug was clear that he doesn't agree with Galbraith on US debt politics, but I was startled at their shared sentiment that banks are happy to lend to the US for 2% over 10 years.
Banks and insitutions buy debt that they can trade. They don't make any agreement to hold that debt for 10 years without selling. If a crisis emerged in a few years, and a US credit event is forecast in a way that caught traders' attention, they can change their position. Why is a current 2% yield on TBonds an effective argument against deficit hawkishness?