THU OCT 04, 2012 AT 07:04 AM PDT<quoted text>
"Deficits don't matter" dick Cheney.
"Deficits don't matter." True or False? Both.
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Our 46th Vice President, Richard Bruce "Dick" Cheney is famously reported, by Paul O'Neill, Secretary of the Treasury, to have said:
Reagan proved that deficits don't matter. We won the mid-term elections, this is our due.
What Cheney meant was that the deficit didn't matter to the electorate, which voted in Republicans, despite having been told throughout the nineties that "balancing the budget" and reducing the National government's deficit was the holy grail. And, since Cheney's only interest was in having power, the deficit didn't matter to him for sure.
I will admit here to having always been leery of the balanced budget meme, because planning to have income and outflow exactly the same was obviously designed to create an illusion that can't be realized. So, of course, it is nice to have a bunch of economists admit that concern about the deficit is a "superstition."
On the other hand, as the economist L. Randall Wray explains in the first session of a series of seminars under the heading, Modern Money & Public Purpose, a national deficit is a real thing and it is a good thing, which, from time to time, we create on purpose. So, deficits obviously do matter.