Harvard's Furman on Ending D.C.'s Debt Obsession

The transcript discusses the evolving views on deficits and modern monetary theory, highlighting changes in economic conditions and their impact on fiscal policy. It examines the relationship between deficits and interest rates, the role of tax reforms in increasing revenue, and concerns about the dollar's status amid rising debt. The conversation emphasizes the need for a balanced approach to fiscal policy, considering both current economic conditions and future implications.

What economic theory suggests that we should stop worrying about deficits?

• Supply-Side Economics

• Modern Monetary Theory

• Keynesian Economics

• Classical Economics

During the presidencies of the first Bush and Clinton, what was the approximate real interest rate?

• 2%

• 3%

• 4%

• 5%

What is one proposed method to increase revenue according to the discussion?

• Increasing government spending

• Reducing public sector jobs

• Closing tax loopholes for high-income households

• Lowering corporate tax rates

What has been the trend of interest rates since the early 1980s?

• Stable

• Increasing

• Decreasing

• Fluctuating

What is a potential risk of increasing debt sales by the Treasury?

• Reducing inflation

• Increasing employment

• Weakening the dollar

• Strengthening the dollar

What is the suggested 'limiting principle' in fiscal policy?

• Reducing taxes

• Paying for new initiatives

• Increasing the deficit

• Unlimited spending

What is a concern if interest rates were significantly lower?

• Higher employment

• Stronger monetary policy

• Increased inflation

• Weaker monetary policy