Posted on 09/02/2009 11:21:03 AM PDT by arthurus
So I began asking myself some tough questions, especially since I've been saying that the economy can grow 3-4% a year in spite of the ugly fiscal policy environment staring us in the face. Just how easily are these deficits going to be financed? Could they effectively absorb all or most of the savings of the private sector, leaving the economy with little or no private-sector investment? Could this be the real "crowding-out" of private borrowers that became a fashionable concern during the Reagan years but in the end proved overblown? How can the economy grow if the government—a chronically inefficient spender and investor—is commandeering nearly all the economy's savings? Annual deficits on the order of 10% of the GDP are reminiscent of Japan in recent decades, and haven't they led to a moribund economy and a crippled stock market?
(Excerpt) Read more at seekingalpha.com ...
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