This article blew my mind. I appreciate the matter-of-fact character and Dr. Galbraith's straightforward ideas about deficit spending. The discussion on this page is great. Will someone please explain this paragraph to me? It was the only thing I didn't understand.
"A recent projection from the Center on Budget and Policy Priorities, based on Congressional Budget Office assumptions, has public-debt interest payments rising to 15 percent of GDP by 2050, with total debt to GDP at 300 percent. But that can't happen. If the interest were paid to people who then spent it on goods and services and job creation, it would be just like other public spending. Interest payments so enormous would affect the economy much like the mobilization for World War II. Long before you even got close to those scary ratios, you'd get full employment and rising inflation--pushing up GDP and, in turn, stabilizing the debt-to-GDP ratio."
Mar 31 2010 - 9:33am