Reagan proved deficits don't matter...

[HappySqurriel]

richardhutnik said:

Kasz216 said:

Except Reagan's deficits are exactly why the economy started going south near the end of his term and during Bush's term. (The good Bush.)

Aside from which, they were fighting the cold war.  Hence why it wasn't a bad move politically... and the deficits weren't nearly as bad.

That's one thing I always found funny though.  People who count WW2 as Keynsian economics... but don't count the Cold War.

Gee, whatever happened to "the peace dividend"?  It went up in smoke, due to an economic slowdown that was dwarfed by what we have now and also said "Muslim menace" that was made out to be far worse than the "Russian menace" back in the Cold War.  A crisis is used to justfiy everything.

Apparently people who have been schooled in only Keynsian economics (with no exposure to the Austrian criticism), fail to see what stimulus effect running deficts have on the economy.  When times were good or better, there was time to get the deficit paid down so you can run deficits in times of a large scale slowdown, as it is now, to help a country retool itself for the future.  But heck, in the long-run everyone is supposed to be dead anyhow (Keynes).

The "benefits" of running a deficit are similar to the "benefits" of adding debt for an individual ...

As long as it is under control and at a reasonable level you can increase your standard of living for quite a long time, unfortunately it makes retiring difficult. If your debt is growing at too rapid of a rate you will rapidly approach a point where you have to declare bankruptcy, and your short term increase in standard of living (Keynsian stimulus) will be followed by a long term period of austerity.