Curveballs

Manzi's take on the national debt is a necessary tonic:

The U.S economy is enormous and resilient, but it is not limitless. We managed to have a national debt that exceed 100% of GDP at the end of WWII, and still did pretty well thereafter. But of course, the entire globe was either bombed to rubble, in a primitive economic state or under the boot of communism, which we now know stifled real economic competition for us. Does that sound like the world we live in today?

Nobody knows what curveballs history will throw at us over the next decade, and we are making ourselves a lot more vulnerable to whatever these turn out to be. I’ve always been skeptical of people who claim that they can draw straight lines between politicians’ backgrounds and behavior, but it seems to me that Obama’s lack of practical experience is showing here: he is insufficiently aware of the need for a huge margin of error in any plan to account for inevitable contingencies.

The obvious counter-argument is that the risks of inaction are also huge. This is correct. It is very likely that some amount of deficit spending today is both inevitable and intelligent. Further, though nobody really likes to put it this way, some amount of sticking our kids with the bill for cleaning up the financial mess, via both Fed and Treasury actions (which are increasingly intertwined) is probably wise, given the mess we have made for ourselves with our profligacy. Based on analogies with other countries that have gone through similar crises, this is likely to be a huge amount of money.