Re: Debt reduction also creates fiscal space

["ÁÎ×Ó¹â HenryC.K.Liu ¹ù¤l¥ú" <hliu@xxxxxxxxxxxxxx>]

Clifford Poirot wrote:

> Here is a rough analogy. If I borrow to buy a house, that is constructive
> borrowing.

Not if the house is bigger than you need.

> If I run up my credit card eating at the most expensive
> restaurants, my future consumption will be harmed.

Not if you do business entertaining.

> In the 1980's, we ran up the nation's credit card.

The question is not the debt, its is how the debt was used, as you suggest.

> Now, in the 90's and 00's we pay for this in the
> current tight fiscal policy. We are made better off by the current tight
> fiscal policy because we are accumulating space to use intelligent leaning
> against the wind policy in the next recession, while eliminating debt.
>

But the CEA said there isn't going to be a next recession, while recent fical
tightness had exacerbated social polarization.  Would America be better off by
not running a surplus and increase government spending on health, education,
etc. or to bring unemployment from the so-called structural bottom of 4% to
zero?

In reality, doesn't debt reduction destroys fiscal space?

Henry C.K. Liu