Re: [Pen-l] Vulnerable logic in Dean Baker's argument?

To: Progressive Economics <pen-l@xxxxxxxxxxxxxxxxxx>
Subject: Re: [Pen-l] Vulnerable logic in Dean Baker's argument?
From: Doug Henwood <dhenwood@xxxxxxxxx>
Date: Mon, 18 May 2009 13:59:05 -0400


On May 18, 2009, at 1:20 PM, Max B. Sawicky wrote:

Consider the counter-factual -- the bondholder doesn't buy the Gov
bond, he buys a private sector asset.
Abstracting from risk/return, how are the rich any richer?

What kind of Keynesian are you? Much government borrowing represents money that wouldn't otherwise have been spent. There's no crowding out - it's an addition.

That aside, higher gov debt service means less money to spend on better things, like education or health or environmental reconstruction. It's a debased use of public funds.

Doug
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