You often hear people complain that deficits are "evidence of overspending." It's taken as de facto proof that the government is behaving "irresponsibly" or "living beyond its means." But economists know (or should know) better. It is inflation (not deficits) that signals overspending. And what does CBO have to say about that? The answer is shown here.


So let's remember that a deficit is merely evidence that the government is putting more money into the economy than it is removing via taxation. Thus, looming trillion-dollar deficits are a prediction that the government will be making trillion-dollar deposits to the broader economy beginning in 2020. Is that something to be up in arms over?

Woah, woah, woah -- hold on there! Yes, it's certainly true that inflation isn't manifesting right now, and perhaps won't, for the foreseeable future. But the second paragraph, stating that the deficits are like "depositing money into the economy", is just gobbledeygook! The government isn't taking this deficit money out of a "savings account" and just plopping the lucre into the economy -- the increased deficit is coming from more borrowing. This should be a cosmic "duh", but this eek-con-o-missed writer doesn't see it. At a minimum, this means that as much cash is being hoovered up by the government as is being "added" to the economy, so the additional deficits are, at best, a zero-sum.

Now, you might reply, "ok, more deficits, who cares? After all, the smart eek-con-o-missed says inflation is the only concern, and there's none of that happening." Well, larger deficits should be at least as much a concern as whether inflation is manifesting, for at least two reasons: (1) as a result of these additional deficits, it is all the more likely that there might, someday soon, need to be higher taxes to pay these creditors back, and/or (probably more likely), a debt default, and (2) many of these creditors are foreign, and they might as a result be able to exert increasing leverage over our country (leading to, e.g., exacerbation of nationalist "blowback", among other ills. Of course, such a thing could never happen...)

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