Deficits and trains in today’s letters to the editor.
What Wild West effect?
While it is true that there are differences between the belt-tightening of an individual or a family and that of a nation’s global budget as Arthur Poskocil assures us (”An off-balance budget metaphor,” commentary, Jan. 19), in the end the penalty is the same.
John Maynard Keynes did indeed teach that the more money in circulation the greater the economy expands and the faster it recovers. But he also recognized that printing money (borrowing to increase the money supply) – over time – inflated the currency and devalued it in the eyes of our trading partners whenever we run a long-term budget deficit or a balance-of-payments deficit in our trading accounts. We have been inflating our currency and running payments deficits with creditor nations since 1975 . We cannot keep on doing this forever any more than a family or a merchant can because eventually the financial community throughout the world will shut off credit and devalue our dollar to that of Zimbabwe or Greece. We are approaching this point, but we can never know just when it will arrive as arrive it surely will.