Good post. I do disagree though that debt is not a policy tool. Debt is an inter-generational savings tool. In a perfect world (from an efficiency stand points), we would have a direct transfers (in the vein of Social Security). Since we don't, we have to use the second best tool, which is a savings tool called government debt. The tool enables us to do the NPV positive investments.
Thanks for the comment. It clarifies my own thinking a bit. :) Who knows what a good Substacker I coud be if more people commented. :)
We are using "tool" in different ways. For me the "tool" is the tax and expenditure decision. Not that DeLong/Smith do not know that it is spending/taxing decisions that need to change. But I think discussing/warning about eventually bad consequences overlooks that those decisions have immediate bad consequences. Growth starting now is a little bit slower that it could have been with less spending with NPV<0 and with a smaller difference between sum of the expenditures with NPV<0 and revenues.
Good post. I do disagree though that debt is not a policy tool. Debt is an inter-generational savings tool. In a perfect world (from an efficiency stand points), we would have a direct transfers (in the vein of Social Security). Since we don't, we have to use the second best tool, which is a savings tool called government debt. The tool enables us to do the NPV positive investments.
Thanks for the comment. It clarifies my own thinking a bit. :) Who knows what a good Substacker I coud be if more people commented. :)
We are using "tool" in different ways. For me the "tool" is the tax and expenditure decision. Not that DeLong/Smith do not know that it is spending/taxing decisions that need to change. But I think discussing/warning about eventually bad consequences overlooks that those decisions have immediate bad consequences. Growth starting now is a little bit slower that it could have been with less spending with NPV<0 and with a smaller difference between sum of the expenditures with NPV<0 and revenues.