This chapter defends the viewpoint of those who say deficits are a huge concern and do matter. Up to this point, you have learned that continual annual deficits have led to a massive national debt. As you’ll see, there are many traditional, long-standing arguments against deficit financing, along with some newer arguments, such as those related to the dangers of an increaseing reliance on foreign creditors and the risk of potential downgrades of the U.S. debt. Many economists, politicians, and citizens say the debt matters more now than it used to. Let’s explore why.
KeywordsInterest Rate Federal Reserve Government Bond Debt Crisis High Interest Rate
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- 1.Congressional Budget Office, “Federal Debt a nd the Risk of a Fiscal Crisis,” July 27, 2010, available at www.cbo.gov/doc.cfm?index=11659 (accessed May 17, 2011).
- 2.Standard & Poor’s, “‘AAA/A-1+’ Rating on United States of America Affirmed; Outlook Revised to Negative,” April 18, 2011, www.standardandpoors.com/ratings/articles/en/us/?assetID=1245302886884 (accessed May 17, 2011).
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