Encyclopedia of Opinion
Question
Do deficits matter?
Position1 of 3›

Structurally high deficits are bad

High deficits that are due to structural (as opposed to temporary cyclical deficits) are bad. They lead to higher inflation and the crowding out of private investment.

Supporting arguments · 2

  1. High deficits affect the financial health of future generations
    High deficits are a problem for countries in the long-term. That said, high deficits are accrued because of the debts of the people of the country. As each generation has more debt, it continues to affect the country in the future. This is what makes prices in the market higher for future generations. Prices continue to rise as deficits remain high.
  2. High deficits by central banks cause high inflation
    High government spending can be one of the main causes of inflation. Governments spending more than they are making causes the value of currency to diminish.