Thursday, 21 October 2010

Why we can afford the deficit.

America can afford this deficit

These other countries did not get into trouble because of high public debt ratios alone. They had some combination of the following conditions that limited their debt-carrying capacity: first, a lack of government control of the money supply of the currency in which most of its debt is denominated; second, debt owed in or convertible into gold; third, the lack of a long history of political stability and an effective means of tax collection; fourth, the lack of a large, liquid market for government debt; and fifth, debt owed personally by a king or other supreme ruler. Not one of these conditions applies to the United States.