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Palley Thomas Budget Deficit Hysteria
Palley Thomas Budget Deficit Hysteria
Thomas Palley
New America Foundation
Mail@thomaspalley.com
Introduction
• Return of fiscal austerity agenda = case of
“Déjà vu all over again”.
• Wrong economic agenda.
• Wrong political agenda.
Why We Need Sustained Deficit
Financed Fiscal Policy - 1
• (1) Keynesian stimulus to fight the
recession.
• (2) Help private sector deleveraging.
• (3) Spur economic growth.
Figure 1. The “virtuous” circle linking growth
and deficit financed public investment.
Growth
+ +
Deficit financed
public investment Fiscal space
+
What is a Sustainable Deficit?
2009 - 2050