But debt can't increase forever, and when households stop borrowing, consumption-driven economic growth will grind to a halt.
The consequences of excessive borrowing and consumption, of the bursting of the credit bubble, have caught up with us.
The idea was to curb borrowing for consumption while raising revenue to pay for revenue-losing provisions of the legislation.
Borrowing for consumption of things like vacations, luxury items or personal whims, fantasy, vanity and extravagance can be hazardous when an economic downturn occurs.
Whether yields were low because of sanguine expectations of Fed tightening or because of a negative term premium, the impact on borrowing and consumption was the same.
Indeed, they've only made the short-term thinking problem worse, with monetary, fiscal and home-ownership policies encouraging even more borrowing and consumption.
William C. Dudley, one of Mr. Bernanke's top lieutenants, expanded on the same theme Tuesday night, saying that the government needed to balance its books, and that the nation needed to reduce its dependence on borrowing and consumption.
Thaler, a professor of economics at the University of Chicago, and Sunstein, a law professor formerly at Chicago but now at Harvard, apply this line of argument to a wide array of familiar areas: saving, borrowing, energy consumption,smoking, teenage pregnancy and many others.
In principle, therefore, China's stock of public debt could be rolled over indefinitely and it would still shrink relative to the size of its economy.The NAO notes tartly that the governments of some countries borrow for "consumption", paying salaries and other outlays that leave nothing durable behind.
As I said in my speech last week at the University of Delaware: a lot is riding on the level of interest rates, including financial asset valuations (to include stocks AND bonds), housing prices, the funding of the federal government, consumer debt service ratios and the consumer's willingness to borrow for consumption.
