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Deficit Hysteria Redux? Why We Should Stop Worrying About U.S. Government Deficits

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  • Yeva Nersisyan
  • L. Randall Wray

Abstract

This brief by Yeva Nersisyan and Senior Scholar L. Randall Wray argues that deficits do not burden future generations with debt, nor do they crowd out private spending. The authors base their conclusions on the premise that a sovereign nation with its own currency cannot become insolvent, and that government financing is unlike that of a household or firm. Moreover, they observe that automatic stabilizers, not government bailouts and the stimulus package, have prevented the U.S. economic contraction from devolving into another Great Depression. The authors dispense with unsubstantiated concerns about deficits and debts, noting that they mask the real issue: the unwillingness of deficit hawks to allow government to work for the good of the people.

Suggested Citation

  • Yeva Nersisyan & L. Randall Wray, 2010. "Deficit Hysteria Redux? Why We Should Stop Worrying About U.S. Government Deficits," Economics Public Policy Brief Archive ppb_111, Levy Economics Institute.
    • Handle: RePEc:lev:levppb:ppb_111
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    References listed on IDEAS

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    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," American Economic Review, American Economic Association, vol. 100(2), pages 573-578, May.
    2. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    3. L. Randall Wray, 2005. "Social Security's 70th Anniversary: Surviving 20 Years of Reform," Economics Policy Note Archive 05-6, Levy Economics Institute.
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    Cited by:

    1. Peter Skott, 2016. "Aggregate demand, functional finance, and secular stagnation," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 13(2), pages 172-188, September.
    2. William Van Lear, 2011. "Economic Crisis and the Fiscal Challenge of the State," Challenge, Taylor & Francis Journals, vol. 54(6), pages 61-77.
    3. Jussi Ahokas, 2012. "Geographies of Monetary Economy and the European economic crisis," ERSA conference papers ersa12p437, European Regional Science Association.
    4. Soon Ryoo & Peter Skott, 2013. "Public debt and full employment in a stock-flow consistent model of a corporate economy," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 35(4), pages 511-528.
    5. C Alexiou & J G Nellis, 2016. "A post-mortem of austerity: the Greek experience," Economic Issues Journal Articles, Economic Issues, vol. 21(2), pages 1-32, September.
    6. Jackson Mejia & Brian C. Albrecht, 2022. "On price stability with a job guarantee," Contemporary Economic Policy, Western Economic Association International, vol. 40(4), pages 568-584, October.

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