An interesting, if obscure debate between Paul Krugman and James Galbraith on whether deficits can *ever* be a problem when denominated in a fiat currency.
Their disagreement seems polemical rather than anything substantive. To paraphrase, Galbraith says that there is a remote, theoretical chance that very high deficits could lead to undesirably high inflation levels, but the conditions under which that would happen (1920's Germany) have no resemblance to today's reality. And there is absolutely, mathematically zero chance of insolvency. Krugman says that under 1920's Germany-like conditions, run-away inflation is indistinguishable from insolvency. Galbraith wishes Krugman would stop even mentioning remote theoretical possibilities of deficit-related problems because it provides fuel to fear-mongers. I am with Krugman on this; nuance is a valuable tool *against* fear-mongering.. More here: http://economistsview.typepad.com/economistsview/2010/07/is-galbraith-right-that-deficits-are-never-a-problem.html -raghu. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
