This is one argument against the stimulus, but in the short term, it's pretty weak. Demand for anything other than government debt is practically nil--look at how much Pfizer is paying to acquire Wyeth.
Over the longer term, it has more bite. The government will eventually have to roll over all this debt, at which point it will undoubtedly be a) more expensive and b) more prone to crowd out private demand for funds. But the supporters can plausibly argue that if we get ourselves stuck in a liquidity trap, the investment climate will be even worse.
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