Like a bad recurring dream, we in the US are once again talking about the “debt ceiling”.
The discussion about public debt is often buttressed by two misconceptions about the economy I would like to dispel.
The first has to do with the government being constrained like a family by its budget and having to spend no more than it brings in.
The second has to do with government debt and how important it is to reduce it.
Both concepts reveal a complete ignorance of basic macroeconomics and make possible the abomination of “austerity” – a brutal and counterproductive economic policy.