Notice that “fiscal deficits” and “crises” are lumped together, though one is positive for the economy and one is negative. There you have then power of survey questions.
And the notion that deficits are more serious than war, unemployment et al, would be laughable, were it not so sad. These are the beliefs shared by economists, politicians, the media and the populace — a perfect demonstration of why we have a recession every five years.
To lump deficits together without reference to the circumstances is ignorance, on one hand, and biasing the study, on the other.
Deficits are irrelevant to the finances of monetarily sovereign nations such as the US, UK, Japan, Australia, and Canada, that not utilizing full capacity at full employment. Deficits are financially relevant in the case of nations that are not monetarily sovereign, such as the EMU countries.
The result is unnecessary hyped up fear-mongering in the media of the monetarily sovereign countries, and this is negatively affecting policy, unnecessarily prolonging recession and unemployment.
Just a small note: For monetarily sovereign nations, deficits are better than irrelevant; they are necessary. The U.S. must create sufficient money (aka “run sufficient deficits”) to meet the needs of population growth, the trade deficit, inflation and desired GDP growth. This requires 5%-10% debt growth during good times and far more during bad times.
(Monetary union countries cannot do this, which is why the euro, as currently constructed, is doomed.)
Without deficits, the inflation-adjusted, per-capita money supply would fall and without sufficient deficit growth, we have recessions. (See: CHART
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