The conventional wisdom is that excessive government debt, and large government deficits, are the roots of all economic evil. When you see the financial dynamics of the economy in an integrated way, the conventional wisdom is conventional stupidity.
The mainstream textbook view that a government deficit is negative public saving, reduces total saving, crowds out private investment, and slows economic growth, is the exact opposite of the accounting truth.
Using double-entry bookkeeping, I show a government deficit is a CRITICAL step in creating fiat-based money, and it actually increases the money available to the private sector, not reducing it as textbooks argue.
Government bonds do not take money from the public, as textbooks assert, and of the three ways in which they could be sold–to the central bank, to private banks, or the non-bank private sector–the current system is the worst choice.
I use simulations in Ravel [software] to compare these three bond-sale arrangements using the same government deficit. I conclude that government debt and deficits need to be understood as part of the broader financial system rather than through a household-debt analogy, and from this perspective, they are not a “bug” of the system, they are a feature
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See also "How Economists Will Destroy Capitalism" from Keen
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