Radio filled with talk about “the debt explosion?
August 31, 2011, 6:36 pm
The Debt Non-Explosion
A conversation I had earlier today suggested that it might be worth pointing out a fact that isn’t as widely known as it should be: namely, that there has not been an explosion in debt over the past few years. There has been a big rise in federal debt, but this has gone along with a collapse in private borrowing, so that overall debt growth has been lower than it was in the pre-crisis years:
Bear this in mind when someone starts ranting about hyperinflation just around the corner thanks to explosive debt growth.
Which suggests, once again, that it will be up to the government to do the economy growing. It’s not a question of whether we think, philosophically, that government should be the main driver of economic expansion. It’s a question of, what do you do when private business is sitting on $1.5 trillion in cash instead of hiring, and businesses who lack the cash are not borrowing to hire either, despite record low interest rates?
Under these conditions, it might be considered unpatriotic NOT to support a massive stimulus program, yes?
Didn’t anybody take high school economics?