re: Do voters really care about the deficit?

Voters should begin by learning the difference between debt and deficits.

Only caring about that money machine going brrrrrr

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Do voters really care about the deficit?

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With everything that has happened so far in 2020? Not at the moment

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Every dollar of national debt crowds out 30 cents of private investment.

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This is bullshite. The crowding out theory depends on govt demand for lent funds to cause an increase in interest rates in the economy which leads to "crowded out" investment. Are you actually arguing interest rates are artificially high right now due to the government?

I for one don’t give shite. A debt is not worth much if you can’t physically take the money

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Why do you decide to make sense sometimes?

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I'm right on nearly ever topic discussed on this board. What exactly do you think I'm so "non-sensical" about?

No, it doesn’t rely on high government bond interest rates. That certainly exacerbates the problem, but crowding out still exists without it.


Consider GM wanting to build a $300 million factory. To do that, they plan to issue $300 million in corporate bonds. They have their buyers lined up and ready to purchase these soon-to-be-released bonds. Then the government makes $300 million in new bonds available to finance a budget deficit. Government bonds are safer than GM bonds, hands down. Even with the lower interest rates on government bonds, the risk averse investors are fine with that lower rate of return in order to buy the safer government bond. So let’s say half of those investors switch over to the government option. Meaning GM needs to find another $150 million of investment to make up the new shortfall. In order to do that, they potentially have to raise the interest rate they offer on their corporate bonds.


So even with government bonds maintaining exceptionally low interest rates, it still impacts corporate bond interest rates. And if those raise enough, GM might find that the $300 million dollar investment is no longer worth the cost. And again, the strongest empirical estimate that I’ve seen calculates that we lose 30 cents of private investment for every dollar of government debt through this mechanism. Now there’s certainly room for inaccuracy there, since it’s a difficult calculation to disentangle. But arguing that the crowding out effect itself is of non-concern just doesn’t have theoretical backing. Even when government interest rates are low.

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Why would a politician commit political suicide by bringing it up?

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Maybe you should ask the guy who said it would be very easy to eliminate it in 8 years...

There’s really no need to worry about the deficit. We are the bank and we are monetarily independent, and don’t owe any country this debt. Honestly we should be “printing” more money to stimulate the economy. As long as the economy can absorb the money, no need to worry about inflation. If you are the bank, why care if you’re in debt to yourself?