Galbraith explains deficit hysteria in one sentence
Bankers don't like budget deficits because they compete with bank loans as a source of growth.
And who owns the legacy parties? The banksters. Who owns our famously free press? The banksters. And who just succeeded in pulling off the greatest transfer of wealth upward in world history, after crashing the economy? The banksters. QED.
And what's it all about? You know the answer! It's all about the rents! Galbraith:
For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in "net financial wealth." Ordinary people benefit, but there is nothing in it for banks.
... When a bank makes a loan, cash balances in private hands also go up. But now the cash is not owned free and clear. There is a contractual obligation to pay interest and to repay principal. If the enterprise defaults, there may be an asset left over--a house or factory or company--that will then become the property of the bank. It's easy to see why bankers love private credit but hate public deficits.
All of this should be painfully obvious, but it is deeply obscure. It is obscure because legions of Wall Streeters--led notably in our time by Peter Peterson and his front man, former comptroller general David Walker, and including the Robert Rubin wing of the Democratic Party and numerous "bipartisan" enterprises like the Concord Coalition and the Committee for a Responsible Federal Budget--have labored mightily to confuse the issues.
What a shame that our tribunes of the people in the "progressive" blogosphere aren't laboring as mightily as the banksters! Instead, by attempting to moderate the hysteria, to ameliorate the results, or to make sure that the only the uncredentialled are thrown under the bus, they're driving to the same destination as the banksters -- just at 89 instead of 98 mph. Sad.
NOTE Et tu, Hillary? It's time to "make the national security case about reducing the deficit and getting the debt under control." I think what Clinton's really saying is that the hot money's going to go on strike again if Versailles doesn't force a lot of cat food down the throats of the American people, both old and not-yet-old. But the hot money's going to do what it's going to do. Maybe it's time to stop worrying and take the hit.
NOTE Hat tip to Selise. And just out of curiousity, why don't we turn the banks into regulated public utilities?