I am seeing a disturbing rise in "free lunch" thinking. One place this increasingly shows up is in the case of "deficits". People seem to have trouble grasping that deficit spending implies future austerity. Let's start with an electric company. Suppose it plans on being in business forever. It decides to issue enough debt so that it's current stock of debt at any given point in time is equal to 1% of the GDP of the city it serves. If the city it serves is growing over time, the electric company can basically run "deficits" forever, or so it would appear. In fact, the electric company still faces a budget constraint. It must still service that debt with money earned from customers. The net
Scott Sumner considers the following as important: Fiscal Policy
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