The Debt Scam

[IndianaGreen]

The Debt Scam

Written by Zoltan Zigedy

The Big Lie

The fear of deficit spending and government debt is, like so many other contrived panics fostered by the rich and powerful, a fantasy. There are no immediate or, necessarily, long term dire consequences to deficit spending or growing national debt, as economist Dean Baker has hammered away for years. By likening national deficits and debt to household budgets, pundits cynically create the fears that pave the way for the slash and burn policies embraced by both political parties. On the other hand, there are often compelling social reasons for increased deficit spending and larger debt accumulation - reducing unemployment, poverty, and poor health care and supporting education, infrastructure, housing, and other public services, for example.

Thanks to a graph conveniently supplied by The Wall Street Journal (4-27-10), we can expose the scare tactics employed by the prophets of doom. The graph maps the place and trajectory of the national debt as expressed by a percentage of the gross domestic product over seven decades with a projection up to 2020. Even a casual glance at the chart shows the explosion of debt incurred during the years of the Second World War, with an unprecedented peak in the mid-1940s, a peak never approached since then.

Pundits explain this simply as an unavoidable necessity brought on by the war effort. With the exception of a few serious students of The Great Depression, no one adds that this massive spending restored the US economy to some measure of vitality and promise. The New Deal took the edge off some of the pain and stabilized the collapse, but only the momentum of extreme deficit war-time spending kept the post-war period from a return to stagnation.

What some herald as the “golden era” of US capitalism – the 1950s – was only possible because of the previous “profligate” era of “spending beyond our means”. While The WSJ graph shows a decline in public debt throughout the 1950s, the level of national debt at the end of that decade remained comparable to the current level. Further debt reduction was only an issue for cranks on the right

http://mltoday.com/en/subject-areas/commentary/the-debt-scam-844-2.html

[Prometheus Bound]

1. Ir's not a scam to Greece when no one will lend to them as a result.

I means usual buyers of government bonds.

[applegrove]

2. Going into debt to get out of a recession is okay. As long as you pay down the debt it

the growth years. Countries are like people. Going into debt isn't healthy.