The historian Niall Ferguson invokes the famous 20th-century British economist — whose policies tend to find favor among free-spending politicians, as Roy Cordato has explained — in a new Newsweek column:
Keynes was a believer in government deficits as a short-term expedient to combat depression. But even he would have regarded America’s current fiscal trajectory as disastrous. According to the Congressional Budget Office’s alternative fiscal scenario—which it sees as politically more likely than its baseline scenario—the federal debt could hit 344 percent of GDP by 2050. Interest payments would absorb nearly all federal tax revenues.
Keynes would also have been dismayed by the extent of America’s reliance on foreigners to finance its borrowing habit. Small wonder the No. 1 topic of discussion at Bretton Woods was the relationship between the United States and its primary creditor: the People’s Republic of China. The consensus at the conference was pretty clear. It’s not just that the Chinese need to wean themselves off an undervaluedexchange rate. Americans need to kick their deficit habit, and the money printing that goes with it.
