Daily Archives: October 18, 2013

How to Talk About Debt and Deficits: Don’t Think of an Elephant*

By Stephanie Kelton

Many economists (perhaps even those who agree with us) refuse to talk about the national debt and government deficits the way we do on this blog. Instead of boldly challenging the assertion that the U.S. faces a long-run debt (or deficit) problem, headline progressives typically do what Jared Bernstein did in his column today — i.e. they pay “obligatory” tribute to the Balanced Budget Gods, thereby reinforcing the case for austerity at some point in the not-so-distant future when we will be forced to to deal with this very bad thing called the government deficit. Followers of my work here and on Twitter know that I refuse to pay homage to the Balanced Budget Gods. Instead, I prefer to shift the burden of proof onto those who contend that the U.S. faces a long-term debt or deficit problem. The first step is to establish that solvency can never be an issue for a government that spends, taxes and borrows in its own (non-convertible) currency. The following quote from the St. Louis Federal Reserve usually does the trick, but this great confession from Alan Greenspan also helps.

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Why is The Economist Chortling over the Prospect of Oil Pollution in Ecuador?

By William K. Black

The Economist has increasingly been copying the descent of the Wall Street Journal into dogma.  One of it perennial hates is President Rafael Correa of Ecuador.  Correa, an economist, has committed the unforgivable offense of succeeding through economic policies that The Economist despises.  This is passing strange because Correa’s four foundational policies are expanded health care, expanded education, improved infrastructure, and encouraging entrepreneurs by reducing the time and cost of starting a business in Ecuador.  The Economists’ pages are littered with praise for right-wing governmental leaders and candidates who promise that they will implement those same four policies (but rarely do in practice).  Correa has actually delivered on his promises – quickly – and the improvements in the economy of Ecuador and the lives of ordinary citizens have been huge.  The result is that Correa is the second most popular head of state in the Americas.

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