“In the long run we need a clear plan to reduce the ratio of publicly held debt to national income. But for now the best chance to reinvigorate the economy, spur business investment and encourage consumer spending is through public borrowing and spending. Instead, we’re heading into an ill-advised, across-the-board austerity program.” – Robert M. Solow, Nobel laureate, Economics
Our Debt, Ourselves
By Robert M. Solow, New York Times, Op-Ed (02/27/2013)
THE significance of America’s national debt is a serious question, but you would not know this from the current political rhetoric, which consists mostly of vague apocalyptic warnings. I want to present a calmer view, by emphasizing six facts about the debt that many Americans may not be aware of.
- Roughly half of outstanding debt owed to the public, now $11.7 trillion, is owned by foreigners.
- The Treasury owes dollars, America’s own currency (unlike Greece or Italy, whose debt is denominated in euros).
- One way to effectively repudiate our debt is to encourage inflation.
- Treasury bonds owned by Americans are different from debt owed to foreigners.
- The real burden of domestically owned Treasury debt is that it soaks up savings that might go into useful private investment.
- But in bad times like now, Treasury bonds are not squeezing finance for investment out of the market.
[MORE] full article at nytimes.com