Both Parties Do Not "Acknowledge" That Budget Deficits Will Cause Problems

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Friday, 15 October 2010 05:03

NPR made this mistake in its top of the hour news segment on Morning Edition. Both parties might say that current budget deficits will cause problems, but they cannot "acknowledge" something that is not true. (If NPR knows this to be true, then it should share this information with its listeners.)

Since the economy has vast amounts of unused resources there is no reason that current deficits would pose any problem. And, the Fed could in principle buy and hold the debt used to finance the deficit so it places no interest burden on future generations.