Saturday, September 3, 2011

Brad DeLong is a Dirty F'ing Hippie

Yes you are!
Would I be being too much of a Dirty F---ing Hippy if I were to say that when the real interest rate at which you can borrow for the long term is zero, borrowing more money and spending it on useful things is very close to being costless? I mean, all you have to do is keep the purchasing power of your creditor constant. Any taxing authority in a growing economy should find that a trivially easy task to accomplish. And the real interest rate risk you are taking on in undertaking such borrowing is second-order small...

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