In the long-run, massive and uncontrolled federal deficits can raise interest rates and discourage investment. This is due to the government borrowing money which makes a higher percentage of savings for investment go towards government securities.
I agree federal deficits can lower investments, and as they raise interest rates, reduce private investment spending. But also, they could create substantial damage to the U.S. economy and to the global financial sector as the United States' economy account for 25 percent of the world's economy.
3 comments:
In the long-run, massive and uncontrolled federal deficits can raise interest rates and discourage investment. This is due to the government borrowing money which makes a higher percentage of savings for investment go towards government securities.
I agree federal deficits can lower investments, and as they raise interest rates, reduce private investment spending. But also, they could create substantial damage to the U.S. economy and to the global financial sector as the United States' economy account for 25 percent of the world's economy.
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