Fascinating piece in the NYT exploring how it is that sometimes the federal deficit is a huge concern and other times it is not. Today, says the piece, the zeitgeist suggests that the deficit is no problem. Unmentioned anywhere in the article is the role of the Fed as the lender of last resort. As Roger Garrison suggests, taking away this power and allowing federal debt to come with a default premium would change political incentives dramatically. Here is Garrison’s Austrian take on what’s wrong with deficits.
Learning to Love the Deficit
