Bruce, I generally do not like "labels", since there is really very little agreement as to what these labels means, are these economic, political, moral or whichever. So I stay away from labeling anyone else and hope that people avoid using labels with me as well. We can discuss how to reduce the debt, what is an efficient taxation policy and what not. I personally think that economically, "no national debt" will create more problems than it solves, but I would like to see about $50 billions/per year taken out on the average, until the debt reaches something in the 10% to 20% of our GDP. If you go for deeper cuts in debt, interest rates will decline like they have in Japan, and the funny thing is that might very well be accompanied (like in Japan) with a major economic slow down, but the rates will be so low that the FED's will not be able to use the interest rate weapon to stimulate the economy. They will be pushing on a cord, and that does not work (as Japan's experience has shown). Furthermore, reduction of the debt at rates of $200 Billions per year or so (with similar budget surpluses) means that too much money is taken out of the economy too rapidly, and that will cause economic dislocations and recessions.
Zeev |
