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This will be my most controversial post.

You can disagree with what I write but no ad hominem attacks please.

I heard this on the podcast, money for everyone by David Stein.

It goes like this. There is a lot of hysterical about the national debt. A reasonable national debt is a good thing, because it puts money into the economy, and we can have growth. Say, we ran a surplus, that would mean that say 10 billion dollars was leaving the economy. Therefore, 10 billion less would be spent, and So companies would either lower there prices, or cut production. That would eat into their profits. Therefore, there would lay off people, and they would have less money to spend, further lowering profits, and causing more layoffs. That is why a national debt is a good thing. What is not good is when too much money goes into the economy. That causes too much money chasing not enough goods, and you get inflation.

Also, the govt. can create as much money as it wants, so it can always pay its bills.
There are two strong pieces of evidence for this.

First, I heard the national debt is killing us in the 1970s. That was almost 50 years ago, and nothing bad happened. Second, the treasury bill is considered to be risk free in all the economic models. If the debt was such a problem, it would not be considered risk free.
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