The economic success of the last decade is premised entirely on the belief that the rising house prices which stimulate debt-driven consumption can be sustained indefinitely.
He formulated international commercial treaties and drew on foreign capital to reduce the public debt, stimulate economic growth, and develop a railroad system.
The rationale for countercyclical compensatory fiscal policy is that the government will engage in deficit spending (financed by monetization of public debt) to stimulate sagging activity, and then repay the debt when prosperity returns.
Keynesian economics talks of the "fiscal illusion" created by government debt: the issuance of such debt can stimulate the economy in the short run by encouraging a false perception of wealth and thus bolstering consumer spending.
The United States, too, has taken a different tack, accumulating new debt to stimulate growth and worrying later about reducing deficits.
Well, we can all see that a state which relies too much on debt to stimulate economic activity is going to come unstuck sooner or later.
During the Great Depression, there was a debate about "pump priming" — about whether the government had to go into debt to stimulate the economy.
In that context, here's some good news extracted from economic theory: We don't need to go deeper into debt to stimulate the economy more.
Like the farm in winter, the nation — through taxation — can require full employment, and does not need to go into debt to stimulate the economy.
In recent weeks, legislators from the ruling Liberal Democratic Party have shot back, calling on the central bank to set an inflation target and buy more government debt to stimulate growth.
While the data is the latest to show the economy shaking off a summer slowdown, it is unlikely to deter the Federal Reserve from completing a plan to buy $600 billion of government debt to stimulate growth.
