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Jared Bernstein
A policy maker asks you: Do deficits matter? She has a 280 character attention span (ie, she's above avg). What do you tell her?
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Dean Baker Nov 7
Not really
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Jared Bernstein Nov 7
Crisp!
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Ernie Tedeschi (ON HIATUS UNTIL APRIL 12, 2020) Nov 7
Yes, they matter. When the next recession hits, monetary policy may be constrained, so deficits may be the biggest deciding factor between downturn and depression. Deficits may have longer-run effects on interest rates, but there may be other, bigger factors going the other way
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Jared Bernstein Nov 7
I strongly agree, but let the record show that at the recent Brookings inflation conference, Bernanke argued that non-FFR stuff was equal to 3 ppts of the FFR. That's not dispositive, and was more bullish than some others, but underscores your "may" re low monetary space.
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Bobby Kogan Nov 7
Depends, but not in the way folks talk about them. Deficits are useful tools, but goal of society is maximal good, so I want deficits to be maximally useful. Increasing inequality w/ them is bad way of generating inflation. Fighting poverty w/ them’s good.
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Bobby Kogan Nov 7
If I can cheat and do one more tweet, I’ll just say that some of these deficits were really good and some were less good. If you wanna say deficit is bad, compare with utility lost from lowering deficit. Largely useless deficit increases obviously are bad.
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Steve Berg Nov 7
Interest rates will tell you?
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Jared Bernstein Nov 7
Scatterplots of 10-yr Treas yield and deficit/GDP
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Stephanie Kelton Nov 7
I take her for ☕️ and tell her that as a policy maker she owes it to the people she represents to dig deeper than a tweet. Then I giver her a signed copy. 😉
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Rohan Grey Nov 7
I dunno, surely 3 emojis would be enough.
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