As per my post earlier today, there is at least one reader of this blog, along with his/her gang of macroeconomics-minded teens, interested in the U.S. debt. I’m guessing many other readers are interested in this topic too. To all such readers, please don’t expect me to be your sole source of information on it. That would be a big mistake.
But, reading Krugman on the topic would not be an obvious mistake. It just so happens that he put up a marvelous post moments ago that explains why he’s not worried about the U.S.’s current debt level. At the end it nicely ties into all the political footballs of the day, tightly spun in standard Krugman style.
What this means is that if you’re worried about the US fiscal position, you should not be focused on this year’s deficit, let alone the 0.07% of GDP in unemployment benefits Bunning tried to stop. You should, instead, worry about when investors will lose confidence in a country where one party insists both that raising taxes is anathema and that trying to rein in Medicare spending means creating death panels.
The title of Krugman’s post is “Debt is a political issue.” No kidding! It is worth a full read.