In CNBC's Here's why economists are not worried about the national debt, economists say that additional government spending is necessary and spending on productive-boosting things like education rather than corporate bailouts will be better for the economy. Some notes from the video:
- Michelle Meyer: The deficit expansion was happening before COVID, the main concern is what happens to the budget on the other side of the pandemic.
- Paul Krugman: We've been using deficits in a "stupid" way, to give windfalls to corporations rather than investing in productive things like infrastructure ... The arithmetic is encouraging, interest rates are well below economy's normal growth rate ... Historically, Britain came out of WWII with debt that was 250 percent of GDP [around 100 percent in US today], so the great danger now is that we spend too little.
- Esther Duflo: In a sense we never have to repay the debt. American economic credit is good and will continue to be good.
- Robert Reich: When you have this much unemployment and underutilized capacity, this is where Keynesianism is most applicable (government as spender of last resort).
- Danielle DiMartino Booth: More debt calls US dollar reserve currency status into question.
- Jim O'Neill: The enormous amount of debt created is in itself one of the massive uncertainties out there. Give the Fed a nominal GDP target (rather than a low inflation target) to ensure that debt-to-GDP ratios come down. Implement some version of a sovereign wealth fund to convert some of this debt to equity.
- William Spriggs: We need to think about whether the debt is creating money for real economic activity. If you borrow money to build a factory, no one says oh that's horrible you just increased the money supply.
- Dambisa Moyo: Government is getting bigger by bailing out industry, and industry is getting more concentrated. The number of publicly traded companies in the past ten years has decreased 50 percent, and we have oligopolistic competition in sectors such as tech, banking, pharma, airlines, and energy. This expands the range of questions about what is fundamentally happening.
- Mohamed El-Erian: The biggest mistake after the 2008 financial crisis was failing to establish high, sustainable, inclusive economic growth. The economy got weaker and the financial system got more distorted because central banks couldn't exit.