[lbo-talk] on Doug's latest show, Galbraith

Marv Gandall marvgand at gmail.com
Sun Nov 25 13:04:42 PST 2012


I thought the cbo was projecting deficits in that range unless taxes were raised and spending cut. Be thatbas it may, the only time the deficit to gdp ratio was that high was during the Great Depression and, of course, much higher during the two world wars. It was also up sharply in theimmediateaftermath of the 2008-09 financial crisis, but has since come down. In no case was there a spike in interest rates or a run on the dollar. in other words, the proposition that deficits of this magnitude are unsustainAble for so long as the economy is operating below full capacity, debt service charges are at historic lows, and denominatedin a currency which enjoys safe haven status even at this deficit to gdp ratio in seems to me unproven and more of an ideological construct designed to justify spending cuts to social programs.

On 2012-11-25, at 2:54 PM, "Jordan Hayes" <jmhayes at j-o-r-d-a-n.com> wrote:


> Doug writes:
>
>> I'm talking about long-term structural deficits of 5%
>> of GDP, which are just not infinitely sustainable. Galbraith
>> was too sanguine about those for my taste.
>
> Maybe he was sanguine about it because there's zero chance that we'll have "indefinite 5%-of-GDP deficits" and because no one is suggesting we will?
>
> /jordan
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