U.S. Intragovernmental debt. The debt will once again become the focus of the soon-to-be-minority party. We should ignore them.
(Image by Wikipedia (commons.wikimedia.org), Author: Farcaster) Details Source DMCA
With a Democrat in the White House, the season of the deficit hawk has returned. So, it’s worth going through the old arguments just to remind everyone that the best response to these people is ridicule.
When Biden puts his proposal on the table, it is likely to push interest rates higher and they will rise further when we actually see the spending taking place. This should not bother us. We more typically have seen long-term interest rates in the 4-6 percent range and considerably higher in the decades of the 1970s and 1980s.
These downsides are real, but if we are engaged in useful spending, like reducing child poverty, rescuing state and local governments so that they can maintain vital public services, slowing global warming, extending health care coverage, then these costs seem minor by comparison.
At cepr.net
