Thursday, March 31, 2005

Wonk Alert

For those who go for this kind of thing, Atrios just highlighted this debate on the U.S. "twin deficits" on Econoblog. Pay attention, this stuff is going to affect our future prosperity.
As Robert Rubin has said, capital markets respond to signals in divining the future. If foreign holders of U.S. debt had reason to think that budget deficit would begin to decline, we might read fewer stories about them reducing their dollar holdings.
What is discouraging about the Bushies is their faith that the market can absorb seemingly endless growth in U.S. government debt.


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