Dennis Jansen Featured in KBTX Interview on Deficit Spending
May 11, 2020
Summary: On Thursday, May 7, 2020, Dennis Jansen spoke about political flurry over deficit spending due to recent economic stimulus packages on news station KBTX.
Jansen said “I think what economists would worry about is if deficit spending seems out of control. It’s economic doctrine that you should run deficits during recessions to help the economy, to borrow and increase spending during a recession. But for the past 3, 4, 5, 6 years, the U.S. government has been running a deficit - it’s been increasing over time, during good times… But borrowing in the current times, when you have this pandemic and a terrible impact on the economy, from both the virus and our response to the virus, now is the time to borrow.”
During this economic downturn, the Federal Reserve has dramatically increased its holdings of assets, and, as a result, the money supply has surged upward, causing inflation to tick upwards.
“The question about inflation is, will the increase in the money supply be permanent? Is it going to be higher and keep growing? That’s something that the jury is still out on,” said Jansen.
Although the average person may not see much difference in the short run, changes are on the horizon.
“It’s almost certain – taxes are going up. So, the government just increased the debt from 80% of GDP to over 100% of GDP. That 25% increase in the debt will mean that we have a higher debt service, or interest on the debt, and we at least have to pay the interest on the debt. Interest rates are really low right now, but they won’t be forever," said Jansen.
Click here to view the the full interview