Friday, February 05, 2010

Puncturing Deficit Hysteria

Krugman in the US and Salutin here in Canada both offer welcome debunkings of the sky is falling deficit hysteria. Krugman's observation that deficit shriekers present their deficit panic stories as ironclad fact rather than ideological opinion that is highly debatable among economists is particualrly helpful.
The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.
Yet they aren’t facts. Many economists take a much calmer view of budget deficits than anything you’ll see on TV. Nor do investors seem unduly concerned: U.S. government bonds continue to find ready buyers, even at historically low interest rates.

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