I'll read this later, as I'm about to log off, but the argument as I understand it is that continued deficit spending results in higher rates than need be and also that the increased government borrowing crowds out private borrowing in the credit markets.
There's the effect on overall rate levels and then there's the impact on issuers of less than US treasury quality.
The connection between inflation and defecit spending is simpler than that... it's a money supply issue. When you run deficits, you in essence are printing more money. For anyone who cares, you can look up the stunningly strong correlation between money supply and inflation.
As for high national debt... I assume we are talking relative changes (i.e., deficit spending)... inflation is a comparative statistic, whereas the debt is a stock (static) variable. You can't compare the two without a little massaging.
Last edited by scott; 10-31-2005 at 02:40 AM.
This article was from 2002 and the financial figures it examines are even older, from 2000 when the U.S. budget office still projected a 1.2% surplus for the fiscal year.
The U.S. deficit was around 400 billion last year on a budget of around 2.1 trillion dollars. That's around a 19% deficit just in one year.
Last edited by Nbadan; 10-31-2005 at 02:44 AM.
So i guess all the bogus stats that were used to try to discredit supply side in the 80's are crap becuase theyre not current.
You're the one talking about current rates of inflation, and then using stats left over from the (fiscally conservative) Clinton administration almost 6 years ago.
Living with other people's money will NEVER come back and bite you in the ass.
Christ, people are ignorant.
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