Exact(13)
Budget deficits, even for Keynesian apostles of deficit finance like me, cannot stay at 12% of GDP, or £175bn, for very long, however justifiable in recession.
But the new catechism, as practiced by Republican policymakers for decades now, has amounted to little more than money printing and deficit finance — vulgar Keynesianism robed in the ideological vestments of the prosperous classes.
In the early 1930s deficit finance was a heresy: in 1931, as bank runs were wrecking America's financial system, President Hoover wanted to balance the federal budget, which in those pre-New Deal days was small beer anyway.
In the world of that theorem, deficit finance spending has no effect whatsoever — really, no effect different from taxing people now and spending — because, as you mentioned, people offset it by saving more.
"Economic faculties that within a few years were to be split wide open on monetary policy, deficit finance, and the problem of big business, were practically at one in their belief that the Hawley-Smoot bill was an iniquitous piece of legislation".Some of the names are familiar even now.
As good Keynesians, the authors are not against judicious use of deficit finance, but they argue persuasively that debt financing has simply got out of control and quote authoritative estimates that the debt-servicing costs of heavily mortgaged, wildly over-borrowed British households are as high now 'as they were at the time of the property meltdown of the early Nineties'.
Similar(47)
Italy is bankrupt- 25 billion dollars in deficit financing.
Last year marked a big change in the pattern of deficit financing in Japan.
The BCV is prohibited by law from endorsing or underwriting deficit financing.
At the federal level we have a huge deficit financed by borrowing from abroad.
Politicians hope that deficit financing will be the way to stimulate the economy.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com