The problem with deficit spending is the interest. It gets paid by the taxpayers. But they get no value from paying the interest. And it goes to the bankers, who already have more money than they need.
Occasionally short term deficits and endless bottomless deficits are not the same beast. The latter is simply a lazy political tool used to buy votes and further enrich the bankers.
Almost a third of the US debt is held by federal agencies that manage benefits programs on behalf of US citizens (e.g Social Security).
Another third is owned by state and local governments, mutual funds, pensions, private citizens etc. That is, other US tax payers that receive benefits from the interest.
Only the last third is held by banks and foreign debt holders.
Large deficit spending may or may not be a problem. Economists and politicians are divided on the issue, but the interest generated from the debt largely goes to US taxpayers and it’s pretty well mixed across the economic spectrum (at least compared to other government economic policies).
Exactly this. In a significant chunk of the cases, debt is just left pocket/right pocket accounting within the local economy when aggregating across government sector, private sector and individuals.
If these deficits creates positive externalities (eg. Jobs through expansion of business, new deal program, or even as we've seen in massive programs like NREGA - increasing purchasing power through direct cash deposits). If the deficit spending puts wealth in the pockets of financial speculators, this is often a problem.
Even for external debt denominated in local currency, devaluation is always an option (though may not be attractive). It's only foreign currency denominated debt which is a problem.
If. And if they did there would be endless piles of political fodder. Politicians patting themselves on the back praising their genius. Etc.
That's not happening. Conclusion? If is generally closer to highly unlikely.
As for left pocket / right pocket those shifts have overhead. A program(s) to manage the programs. Let's consider that interest. Let's consider that too little value added to the taxpayers. In other words, the deficit is being used to perpetuate the government and the status quo, and not much more.
In theory I agree with you. Unfortunately, the reality is much different. The fact it has been normalized doesn't mean we should accept it.
Only one third? At the size of the deficit that number is significant.
As for the rest. The taxpayer is paying the interest to borriw as well. So that's a wash. Then there's the bureaucratic overhead devoted to the deficit. That's a loss.
The reality is, it's a net loss to the taxpayer. That is money is magically moving around and too little value is being delivered. Ask any taxpayer if they're getting value.
Occasionally short term deficits and endless bottomless deficits are not the same beast. The latter is simply a lazy political tool used to buy votes and further enrich the bankers.