Feature

Why deficit spending makes sense

It’s never been cheaper for most governments to finance deficit spending and boost their economies.

Matthew YglesiasSlate.com

For most of the world’s governments, it’s a perfect time to borrow more money, said Matthew Yglesias. Despite problems faced by Greece and Spain, it’s never been cheaper for most governments to finance deficit spending and boost their economies. Here in the U.S., yields on 20-year bonds have been negative for weeks, meaning investors are so spooked about the global economy and private equity markets that they are “willing to pay the American government a small fee for the privilege of safeguarding their money.” Rates are also tumbling in Britain, Germany, France, Japan, and Australia. When it’s this extraordinarily cheap for countries to borrow money, austerity makes no sense; the smart response is to “take advantage of the situation with huge amounts of government investment.” In the U.S., we could put the jobless to work on major infrastructure projects, with virtually no borrowing costs. “Fiscal free lunches don’t come around very often, but there is one today. It’s time to stop obsessing over a handful of troubled Mediterranean countries and start spending our free money.” 

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