Bernard Raymond Jabre

Debt is taking the blame. We watch trillions pile up in the United States, France, Italy and elsewhere in Europe, and wonder how far it can go. But debt is not the disease. It is the symptom. The disease is a budget deficit that has become permanent. We need to go back to Keynes. John Maynard Keynes never envisioned deficits as a normal, permanent feature of government. His thinking was rooted above all in the economic cycle. When the economy collapses, private investment dries up, unemployment rises, and fear paralyzes businesses and households, the state must step in. It spends, invests and accepts a temporary deficit. Monetary policy can also become more accommodative.