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We could pay off the debt if we wanted to; it definitely is possible. The question in my mind is - if a country like the US has the ability to print the world'

• nhaehnle 15y ago
  It is absolutely beneficial, in most cases, and it's not even a question of having the world's reserve currency. A look at sectoral balances helps to analyze this: the government's budget deficit is equal to the non-government's (private plus external sector) budget surplus. That's just a basic accounting fact. So if the non-government sector desires to be in surplus (as it usually does), then the government must run a deficit. If it tries to run a surplus despite the non-government desires, there is a conflict, and someone will have to budge. Usually, the first ones forced to budge are those with the least economic clout. The result tends to be large scale unemployment. There is nothing inherently bad or good about government deficits (I dislike the sentiment that is so often voiced by politicians, who frame the deficit and debt as a moral issue - those are just numbers in computers, for Bob's sake! Unemployment, poverty, those are issues where morals come into play). It's simply that given the typical long-term private sector behavior, a long-term government deficit is the pragmatic and economically responsible thing to have.