For a country like the US—one that runs persistent current account deficits—government deficits are perfectly normal and
almost always necessary to achieve healthy economic outcomes.
That doesn’t mean budget surpluses are impossible—we saw them under the Clinton administration 1998-2001—but it does make them unsustainable, as Wynne Godley and Randall Wray warned.
This thing we call a government “deficit” is just the difference (G-T) between two numbers.
One number tells us how many dollars the government disperses into our hands each year (G) and the other tells us how many dollars it subtracts away from us, mostly through taxation (T).
A fiscal “deficit” happens when the government puts in more dollars than it removes (G>T).
We can refer to it as a “government deficit,” or we can call it a “non-government surplus.”
Stephanie Kelton 5 March 2022
https://stephaniekelton.substack.com/p/bidens-sotu-mentioned-the-deficit
Wynne Godley, an Economist Who Modeled the Crisis
If the economics profession takes on the challenge of reworking the mainstream models that famously failed to predict the crisis, it might well turn to one of the few economists who saw it coming, Wynne Godley of the Levy Economics Institute.
Mr. Godley, unfortunately, died at 83 in 2010, perhaps too soon to bask in the credit many feel he deserves.
In a 2011 study, Dirk J. Bezemer, of Groningen University in the Netherlands, found a dozen experts who warned publicly about a broad economic threat, explained how debt would drive it, and specified a time frame.
Most, like Nouriel Roubini of New York University, issued warnings in informal notes. But Mr. Godley “was the most scientific in the sense of having a formal model,” Dr. Bezemer said.
Jonathan Schlefer The New York Times, September 10, 2013
https://www.levyinstitute.org/
As long as the US runs a giant trade deficit, we are going to have lower interest rates than we would otherwise
John Mauldin 11 February 2022
https://englundmacro.blogspot.com/2022/02/as-long-as-us-runs-giant-trade-deficit.html
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