HappySqurriel on 02 August 2011
Saying "deficits don't matter" is sort of like saying "Drinking alcohol is okay" ...
It can be argued that (in moderation) a deficit that is roughly equal to (or less than) GDP growth doesn't really matter because the total public debt as a percentage of GDP doesn't change; and the risks associated with having government debt are unlikely to materialize.
Running a large deficit (say 10% GDP and 8% higher than GDP growth) is kind-of like living your life on a constant bender where you drink until you're pass-out drunk every night. While no one can say for certain when this will lead to a crisis, everyone knows this behaviour is unsustainable and it is only a matter of time where it will be forcibly "ended".
