cross-posted from: https://lemmy.one/post/15434778
Krugman chimes in on US national debt
Alternative link: https://archive.ph/ce08r
"Specifically, let me make three points. First, while $34 trillion is a very large figure, it’s a lot less scary than many imagine if you put it in historical and international context. Second, to the extent debt is a concern, making debt sustainable wouldn’t be at all hard in terms of the straight economics; it’s almost entirely a political problem. Finally, people who claim to be deeply concerned about debt are, all too often, hypocrites — the level of their hypocrisy often reaches the surreal.
How scary is the debt? It’s a big number, even if you exclude debt that is basically money that one arm of the government owes to another — debt held by the public is still around $27 trillion. But our economy is huge, too. Today, debt as a percentage of G.D.P. isn’t unprecedented, even in America: It’s roughly the same as it was at the end of World War II. It’s considerably lower than the corresponding number for Japan right now and far below Britain’s debt ratio at the end of World War II. In none of these cases was there anything resembling a debt crisis. …"
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Reported as an editorialized headline, but that may be a function of the cross-post. Fix it and I’ll restore it.
It wasn’t a problem in the past because the economy grew faster then the debt. This was from industrialization, then increased world trade, and then high tech. Are we guaranteed that this will continue? I say no. We can’t continue growing the debt thinking we’ll just pay it off with the future better economy.
His examples are bad. WW2 was an unprecedented expensive event. Japan went through stagflation.
Modern Monetary Theory is this big idea… and if it’s right the US national debt is meaningless and we should suspend actual debt servicing. If it’s wrong we’re absolutely fucked.
Right now America is generally operating under the fiction that MMT is “actually like totally true guys” but we refuse to use QE to reduce the debt because, actually, we know it’s fucking bullshit.
Does it matter that we owe 50 billion vs. 50 trillion dollars - not purely from the number - it matters that we’re constantly transferring a huge chunk of our national revenue to debt holders. If we bit the bullet and QE’d that debt into oblivion that’d be fine, but everyone with an actual brain knows that’s a terrible idea.
Paul Krugman is kind of a legendary wrong idiot.
