With Inflation Well Below Targets and Interest Rates Near Record Lows, the Washington Post Wants to Reduce the Deficit

February 10, 2016

Yep, we have such clear warning signs of imminent disaster. I should probably also point out that the interest burden measured as a share of GDP (net of money refunded from the Fed) is at the lowest level since before World War II. You can see we are imposing a terrible burden on our children. At least the Post is honest and says that its deficit reduction means cutting Social Security and Medicare.

Oh well, here on Planet Earth low interest rates and low inflation are a very good market signal that the economy could use much more demand (i.e. larger budget deficits). The Post actually seems to support this, but tells us about the Congressional Budget Office’s (CBO) projection of higher deficits in future years. As we pointed out yesterday, those higher deficits are the result of CBO’s projection that interest rates will rise sharply. They have a great track record of being badly wrong on this score six years in a row. I suppose seventh time could be a charm, but I wouldn’t bet on it.

Anyhow, serious people would be worried about boosting the economy now and putting people back to work. People are suffering today and our children our suffering. This is both because we have plenty of money so that they don’t have to drink lead and also because putting their parents out of work is a horrible thing to do to kids.

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