“We all think we’re going to get out of debt.” -Louie Anderson

Spfahey writes:

Frank Newman, former deputy secretary of the U.S. Treasury, presents one of the most interesting arguments I have seen for government deficit spending. I have thought all along that the best way out of a recession would be to spend our way out. Demand simply isn’t created and when companies don’t see demand, they have no reason to expand. China is investing in its future and seeing enormous growth because of it. 
Granted it does sound simplistic, but it is not often that I have seen someone suggest that we don’t have to worry about our debt problem because we will never pay it off. Newman suggests that there will be no future added burden on our children and grandchildren as the politicians would have us believe and that we will not face the same problems as Europe because their problems stem from being divided. 
Is his argument sound? 

Should we really stop being concerned about the amount of debt that we are building? 

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

One comment

  1. While Frank Newman argues that the US government should stop worrying so much about deficits and spend more instead like the Chinese government, in my opinion he is missing a very key factor in China's economic boom.China's economy is booming while America's seems to struggling because this country is probably the biggest exporter of products. America on the other hand, has changed from being an exporter to an importer of almost all it's consumer products. Look around the majority of goods available for sale was wholly or partially made in China.China can afford to spend in this manner because it has a large debt due to them. We do not. the US for one owes China big time. It is ludicrous in my opinion to spend like crazy based on the notion that the debt you incur will never be paid off. What about the US credit rating? Wouldn't this behavior affect our rating. I think so!

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