Momma Mia
The "Economist Mom" has started a blog. (Hat tip to the greenie economists.) I was going to criticize her for criticizing the Laffer Curve (without explaining why the episodes of revenues going up in the 1980s and even under George W. Bush don't count), but that got shunted aside when I saw this:
Deficit financing is a cost-maximizing budget strategy — because of the curse of compound interest. The choice is simple: Pay for it now, or our kids pay even more for it later. For example, the balance on a $1,000 loan swells to more than $3,000 when repayment is put off for 20 years, even under a relatively low interest rate of 6 percent.
I think this is literally a fallacy that Landsburg or Friedman dissected in one of their pop books. I posted a comment, asking her if only suckers take out 30-year mortgages.
If I really wanted to be a jerk, I could have asked if no company buys materials from Japan, because the prices there are like 100 times higher than here. This is the well-known "Japanese cost-maximizing strategy."
(Not only does she have a Ph.D. in economics, but apparently: "From January 2007 to April 2008 she served as chief economist for the House Budget Committee." Wow.)
Deficit financing is a cost-maximizing budget strategy — because of the curse of compound interest. The choice is simple: Pay for it now, or our kids pay even more for it later. For example, the balance on a $1,000 loan swells to more than $3,000 when repayment is put off for 20 years, even under a relatively low interest rate of 6 percent.
I think this is literally a fallacy that Landsburg or Friedman dissected in one of their pop books. I posted a comment, asking her if only suckers take out 30-year mortgages.
If I really wanted to be a jerk, I could have asked if no company buys materials from Japan, because the prices there are like 100 times higher than here. This is the well-known "Japanese cost-maximizing strategy."
(Not only does she have a Ph.D. in economics, but apparently: "From January 2007 to April 2008 she served as chief economist for the House Budget Committee." Wow.)
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