RE: Re: Re: RE: reform and rev

["Devine, James" <jdevine@xxxxxxx>]

> >(2) what happens if in running deficits, the US sucks up global
> >capital, raises interest rates, and visits catastrophe on poorer
> >nations? is this possible?

Doug answers:
> You're assuming that deficits drive up interest rates. There's no
> simple relation between deficits and interest rates. If deficits rise
> because of a weak economy - either passively, because of lower
> revenues, or actively, as a policy choice - then government credit
> demand could be offset by weaker private credit demand.

also, the private sector can run large deficits -- as it has in recent years
-- which can have the effect (ceteris paribus) of driving up interest rates
and sucking in funds from overseas.

JD