Does The National Debt Matter? | What’s Next For The U.S. Economy Description video: With the national debt surging past $26 trillion, we asked top economists, analysts and policy makers why the deficit matters. Paul Krugman said the deficit doesn’t […]
Does The National Debt Matter? | What’s Next For The U.S. Economy
With the national debt surging past $26 trillion, we asked top economists, analysts and policy makers why the deficit matters. Paul Krugman said the deficit doesn’t matter too much and said instead the great danger is that America spends too little. Danielle DiMartino Booth countered by saying such a large debt puts U.S. sovereignty at risk and Congress needs to step up. Mohammed El-Erian said we need to win the war against the threat of a global depression and secure economic peace by creating lasting and effective policy. Robert Reich thought now is just not the time to worry about the national debt. Watch the video to hear more.\n\nMany arguing against aggressive stimulus spending from the federal government cite one critical reason: the national debt. Now totaling over $26.7 trillion, the U.S. debt-to-GDP ratio is one of the highest in the world.\n\nTop economics and policymakers, however, are not concerned. \n\nWhen asked about the staggering number, Nobel laureate Esther Duflo told CNBC, “That is not something that the general public should be worried about for the time being at all.” She continued, explaining that American credit is one of the safest assets to hold, so in a sense, it is unlikely that the government will ever have to repay this debt.\n\nAFL-CIO chief economist William Spriggs asked us to consider if the national debt is creating money for real economic activity. If so, like in an example where a company or governmental agency takes out a loan to build a factory thus creating jobs, then there should be no reason for alarm.\n\nFormer Labor Secretary Robert Reich feels now is not the time to be worried about the national debt for exactly the reason Spriggs mentions. “When you have this much unemployment, when you have this much-underutilized capacity; this is the time when the government has got to be the spender of last resort,” he said.\n\nAlthough Nobel laureate Paul Krugman was not impressed with the current choices of government spending, he was not concerned with the spending itself. He said “even though we’ve been running budget deficits that are kind of stupid, if you were going to run budget deficits, you should be using the money to build infrastructure to help education, to work on the future. And instead, we’ve been using it to get big windfalls to corporations and rich people.”\n\nWhen looking at instances where the government bails out private sector companies, take for example the $25 billion in payroll grants for the Airline industry, Dambisa Moyo argued for more collaboration between the private and public sectors to combat the growing size of the government.\n\nJim O’Neill did see the deficit as a problem in the long run and suggested solving the national debt crisis by giving the Federal Reserve a different target than low inflation. Danielle DiMartino Booth maintained that targeted government spending is necessary for economic recovery but worried that such an expanding debt could leave the U.S. vulnerable to bad actors in the long run.\n\nWatch the video to learn more about why some economists think the national debt may not matter.\n\n» Subscribe to CNBC: https://cnb.cx/SubscribeCNBC\n» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision\n» Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic\n\nAbout CNBC: From ‘Wall Street’ to ‘Main Street’ to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.\n\nConnect with CNBC News Online\nGet the latest news: https://www.cnbc.com/\nFollow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC\nFollow CNBC News on Facebook: https://cnb.cx/LikeCNBC\nFollow CNBC News on Twitter: https://cnb.cx/FollowCNBC\nFollow CNBC News on Instagram: https://cnb.cx/InstagramCNBC\n\n#CNBC\n\nDoes The National Debt Matter? | What’s Next For The U.S. Economy
Fed concerned about future growth of the US economy
Federal Reserve officials reiterate their doubts about the pace of US economic recovery, given new cases of massive coronavirus infections.
Fed Presidents of Atlanta, Boston and Richmond have unanimously indicated the presence of «air pockets», hanging over the US economy. The country still faces the problem of employment, the growth of unemployment benefits, as well as weak consumer interest in a number of segments..
«The construction sector has been doing relatively well, but now there is a lack of orders and disruptions to deliveries. In addition, this month the increased unemployment benefits expire, which played an important role in supporting the population.» – said Fed President Richmond Thomas Barkin.
In addition, the economy is plagued by new large, local outbreaks of COVID-19 infections..
However, not all Fed officials are pessimistic.. St. Louis Fed President James Bullard I am convinced that the mask mode will play a role in returning people to work, and by the end of the year the pre-crisis positions will be practically restored.
It should be noted that besides Bullard, no one else at the Fed expects such a rapid solution to the unemployment problem..
“Unfortunately, I expect our economy to be weaker by the end of the year than many hoped.», – said the Boston Fed President Eric Rosengren.
Atlanta Fed Chief Raphael Bostic expressed concern at how quickly and imprudently the southern states began to lift restrictive measures.
Some of the regulator’s officials suggest that the seemingly rapid recovery of employment and the revival of consumer demand may significantly sink in the coming months..
Many business representatives even note that they do not yet observe client interest in their activities.
However, overall optimism among entrepreneurs has indeed improved since the first weeks of the pandemic.. This is evidenced by the results of the study, which show that residents of the country believe that the most serious economic consequences have been avoided..