Dean,

Ya' might want to include at least a sentence (a clause perhaps) letting your readers know that, while you are refuting a claim regarding the short term (i.e., you are explaining that higher deficits now provide more immediate stimulus than the magnitude of drag from higher interest rates they may cause), there is indeed a trade-off over the long term. Otherwise -- if higher deficit spending meant a stronger economy over both short and long-term -- the obviously optimal fiscal policy would be to always run up deficits literally as high as possible, right?

Might be worth a clause or (dare I suggest it) a whole sentence, lest some of your readers be misled, based on your argument, into considering completely invalid the broader point that much higher persistent, projected deficits would create upward pressure on interest rates that certainly could eventually result in a significant net negative impact on the economy. (And I'm sure you would want to avoid misleading your readers, even if such a misunderstanding would be conducive to public support for the policies you desire...right?)

Right on the money, Brooks. A couple of analogies would be belaboring the obvious so that every communication would take many times longer; or saying that someone should get help, without specifically naming that person, which would lead to doctor's offices everywhere being permanently packed to the gills.

I thought the article was good but incomplete. If the reporter, Jackie Calmes, had talked more about how the projection in costs for Medicare are going to blow a big hole in the budget if nothing is done, it would have made more sense to place such an emphasis on the deficit.

Of course, like you, I'd like to see a discussion of alternative options that never get mentioned: altering barriers so that more professionals could come in and practice if they wanted and allowing people to buy into the systems of other countries. But I'm not going to hold my breath.

However, the value of the dollar seems to be controlled far more by political decisions than market forces at the moment

It would be helpful if someone could explain the mechanisms by which political decisions influence exchange rates. I seem to recall that the British government was unable to keep its commitment to a strong pound about a decade ago. Why were markets able to overpower politics then, and why are they unable to do so now?

Fuller,

Try making a valid, relevant point.

I suggest Dean add a sentence or even a clause just to make an important conceptual distinction, lest some people misunderstand a central point in the debate of a very important policy issue currently being debated, and you erect this silly straw man of some fictitious suggestion involving something far more lengthy and elaborate in order to criticize any such thing as excessive.

Either you are not bright enough to grasp that fundamental distinction or you are just someone who feels compelled to present the pretense of a point even though he has none. If the former, try thinking harder or at least developing enough awareness of your limitations that you don't throw out ridicule that combines stupidity with ironic snark; if the latter, grow up.

Dean,

I don't know if your "For the record" update was intended as a response to my suggestion, but if it is, please actually, clearly, explicitly address the bottom line implication:

I'm saying that, while there is certainly a short-term stimuluative benefit of high deficits (particularly high deficit-financed spending), and while I'm inclinded (just intuitively) to agree that this short-term stimulus generally exceeds drag from higher (long-term) interest rates (and thus is net stimulative), deficits of sufficient magnitude over a sufficient period of time producing sufficiently large publicly-held debt-to-GDP certainly could eventually cause sufficiently higher interest rates to bring GDP significantly below what it would have been had deficits and debt-to-GDP been lower and the deficit-financed stimulus foregone. Or in short, higher deficits are net stimulative in the short term, but over the long term certainly can negatively impact GDP.

Do you agree/disagree with the above?

I'm also saying that if Congress were to do what Greenstein was describing -- "if Congress were to pass a big healthcare bill that was heavily deficit-financed" -- and if by "heavily deficit-financed" we mean net of any beneficial cost-containment effect, then Congress doing so would eventually, over the long-term, have a substantial negative impact on GDP.

Do you agree/disagree?

For the Japan experience:

"For the record, it is perhaps worth explaining how higher interest rates, caused by larger deficits, could affect demand. There are three main channels.

Higher interest rates have some impact on investment, but most research shows that this effect is very limited. Growth in demand is a far more important determinant of investment than interest rates.

Higher interest rates can affect demand through consumption. If interest rates fall, then it is easier for people to borrow. In the current context, it is unlikely that lower interest rates will affect consumer spending to any great extent since most people have very limited ability to borrow as a result of the collapse of home prices and the loss of home equity. Also, almost everyone who has the ability to refinance has already done so.

Higher interest rates can have an effect on housing demand, although the marginal economic impact of even fairly large changes in interest rates (1.0-2.0 percentage points) is likely to be limited. The demand generated by sales of existing homes is not very large so that even a large increase/decrease in sales will not have very much impact on the economy. With the enormous inventory of unsold homes, it is almost inconceivable that building will pick up appreciably in the next couple of years.

Higher interest rates can raise the value of the dollar as foreign investors decide to hold more dollar-denominated assets. This would increase the trade deficit. However, the value of the dollar seems to be controlled far more by political decisions than market forces at the moment, so it is unlikely that it would rise much if the deficit grew.

In short, it is difficult to identify a channel whereby a higher long-term deficit can have a substantial negative impact on demand in the near future.]"

Just replace high interest rates with low interest rates. Welcome to the Richard Koo balance sheet recession.

Sorry Brooks, there's no irony in my post. As to the stupidity and immaturity, Wikipedia has a nice explanation of the concept of "projection".

Fuller,

Unfortunately for you, I've demonstrated why your comment was stupid. You can reply with empty snark all you want, but it's no substitute for logical argumentation. Your attempt to make that substitution is yet another example of ironically stupid snark, and once again points to a lack of maturity (hint: a mature person, upon having his argument revealed to be utterly nonsensical, wouldn't reply by doubling down with yet more baseless snark). But of course I should qualify the preceding criticism by noting that it's possible that you are too dumb to understand my explanation of the nonsensical nature of your initial comment, and thus actually (somehow) believe that you have made a valid point (There's always that question of whether someone truly somehow just doesn't get it vs. his being insincere and immature).

Brooks blithered, You can reply with empty snark all you want, but it's no substitute for logical argumentation.

"Why beholdest thou the mote that is in thy brother's eye, but considereth not the beam that is in thine own eye?"

Recap:
1. I make a substantive point.
2. Fuller responds with a nonsensical comment.
3. I explain why it was nonsensical.
4. Fuller responds with empty snark.
5. I point out to Fuller that empty snark is no substitute for argumentation.
6. Liberal chimes in with...drum roll please...empty snark (and thus irony to which he is oblivious).

There's no doubt about it Brooks, you're as smart as they come.

Fuller,

I guess you require repitition for comprehension (or at least any chance of it): Empty snark is no substitute for argument. I explained why your initial comment was nonsensical. For you to persistently reply with only empty snark would feel embarrassing to you if you had enough sense to realize how pathetic it looks.

If you disagree with my take on your initial comment, and if you actually do have a valid criticism of my initial comment, go right on ahead and provide it. Or you could just continue repeatedly calling me a doo doo head with your eyes tighly shut and your hands tightly covering your ears.

Fuller,

I guess you require repitition for comprehension (or at least any chance of it): Empty snark is no substitute for argument. I explained why your initial comment was nonsensical. For you to persistently reply with only empty snark would feel embarrassing to you if you had enough sense to realize how pathetic it looks.

If you disagree with my take on your initial comment, and if you actually do have a valid criticism of my initial comment, go right on ahead and provide it. Or you could just continue repeatedly calling me a doo doo head with your eyes tighly shut and your hands tightly covering your ears.

Fuller,

I guess you require repitition for comprehension (or at least any chance of it): Empty snark is no substitute for argument. I explained why your initial comment was nonsensical. For you to persistently reply with only empty snark would feel embarrassing to you if you had enough sense to realize how pathetic it looks.

If you disagree with my take on your initial comment, and if you actually do have a valid criticism of my initial comment, go right on ahead and provide it. Or you could just continue repeatedly calling me a doo doo head with your eyes tighly shut and your hands tightly covering your ears.

I did not submit the above comments three times as shown. Notwithstanding my reference to "repetition", I have no idea why the comment has been posted repeatedly.

Once again you're right on the money, Brooks: my snark was empty! When I said you were a smart feller, I actually meant that you are a fart smeller.

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