David Thomson
2008-03-10 11:09:17
“Glenn Hubbard seemed likely to be the next chairman of the Federal Reserve until he testified that whopping budget deficits wouldn’t affect interest rates – yet his own textbook gave a detailed mathematical explanation the effect government borrowing has on credit markets.”
Glenn Hubbard did not contradict himself. The proposed government deficits represented a very small fraction of the overall American economy. It would be comparable to someone earning a comfortable six figure income and handling debts representing less than four percent of the total. Hubbard’s point in his textbook would not kick in until that percentage rose somewhat higher.
