“Bruce Bartlett is one of the smartest economic oberservers out there.”
The smartest economic observers would have to be John Maynard Keynes and Milton Friedman. Bruce Bartlett is a political hack.
Keynes argued that a slump was not a long-run phenomenon that we should all get depressed about and leave the markets to sort out. A slump was simply a short-run problem stemming from a lack of demand. If the private sector was not prepared to spend to boost demand, the government should instead. It could do this by running a budget deficit. When times were good again and the private sector was spending again, the government could trim its spending and pay off the debts they accumulated in the slump. The idea, according to Keynes, should be to balance your budget in the medium term, but not in the short run.
The US wants to see its currency weaken to ease its current account deficit which has been a factor behind the dollar's recent decline. Plus, it’s easier to fund the deficit if the dollar loses value.
Holtz
JeffersonRepublic.com
So when times are bad the government should drain resources from the economy by issuing debt. Um Hum. Give that some thought, would you? You do know that the latter 20th century crises were handled by the Fed pouring reserves into the banking system. Not by the government issuing debt to drain financial assets away from the private sector. That is a recipe for disaster. Keynes had the unfortunate attitude that government could stimulate the economy by government spending. If that had any effect at all it was short term. Government deficit spending doesn't create any wealth or permanent jobs.
Bartlett is a policy analyst. Keynes was right about deficits, but the government should promote investment and business activity, not demand. Manipulating currency is a zero sum game. For everything it gives it takes away, and often times it leads to loss of confidence in the currency. Trade balances are no problem as long as they result from differences in domestic growth between trading partners. The federal deficit is the real problem. If a Democrat was in the White House I'd probably get close to 100% agreement around here.