Economists Agree: Deficits Matter

Mar 14, 2019 | Economics

Rarely do economists agree on anything. But a survey this week through the University of Chicago's IGM Forum found that 42 top economists from across the ideological spectrum showed universal agreement that all countries should worry about excessive deficits.

The Forum posed two questions related to Modern Monetary Theory (MMT) suggesting deficits don't matter, both of which resulted in 0 percent agreement to the premise.

The first question asked whether countries that borrow in their own currency shouldn't worry about government deficits because they can always create money to finance their debt. Weighted by confidence (and removing non-responses), 72 percent of the economists said they strongly disagree, and the remaining 28 percent said they disagree.

Source: IGM Forum 

The second question asked whether countries that borrow in their own currency can finance as much real government spending as they want by creating money. Weighted by confidence (and removing non-responses), 76 percent of the economists said they strongly disagree, and the remaining 24 percent said they disagree.

Source: IGM Forum 

The bottom line: economists agree deficits matter. As we've explained many times, the federal government cannot simply accumulate high levels of debt without consequence.

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