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What economists say that increasing interest rates reduce either existing debt or public debt? The cost of borrowing is increased, so obviously there's less new
by elgenie 8y ago
What economists say that increasing interest rates reduce either existing debt or public debt? The cost of borrowing is increased, so obviously there's less new private debt issued, but the cost of debt service for both private debt and, crucially, public debt increase, which means greater budget shortfalls and more (compounding) public borrowing.
If your point is "well, the economy is a very complicated system", that's an argument for avoiding a large drastic action done to that system against the vast majority of expert economic advice, not for it. This tax cut wasn't even the typical "We need to do something. This is something!" fallacy, it was "We don't need to do anything. This is something!".