Deficits and Policy: The Historical Record

• Virtually all governments run large deficits in war-time.

• In peace, Keynesian policy recommends counter-cyclical policy:

• • Deficits during recessions to stimulate economy
  • Surpluses during expansions to pay down debt created during previous recession.

• At the time this is written (Sept 2007), Total U.S. National Debt = approx $ 9 trillion, or just a little less than $30,000 for each person in the U.S.