Debt Is Good

Remember all that talk about the debt and deficit and how it was going to be the end of us?

Yeah...still not happening.

Paul Krugman is wondering that as well and he's got some hilarious points in his pondering.

Wags quickly noted that the U.S. economy has, on the whole, done pretty well these past 180 years, suggesting that having the government owe the private sector money might not be all that bad a thing. The British government, by the way, has been in debt for more than three centuries, an era spanning the Industrial Revolution, victory over Napoleon, and more.

Any day now...

After all, we’ve spent much of the past five or six years in a state of fiscal panic, with all the Very Serious People declaring that we must slash deficits and reduce debt now now now or we’ll turn into Greece, Greece I tell you.

Does anyone take them seriously anymore? Ron Paul is now setting up his retirement by fear peddling but that's about it.

So, is debt good?

I’ve already mentioned that having at least some government debt outstanding helps the economy function better. How so? The answer, according to M.I.T.’s Ricardo Caballero and others, is that the debt of stable, reliable governments provides “safe assets” that help investors manage risks, make transactions easier and avoid a destructive scramble for cash.

Yep.