Since the Vietnam War, US budget deficits, money creation, and current account deficits have often been high.

The consequences have been high internal and external deficits.

Deficits are riskier if the level of the national debt, the accumulation of all previous deficits, is high or rapidly rising relative to GDP.

And large deficits and high debt levels decrease the prospects for a long boom.

Indeed, rapid growth in investment may translate into high import growth and trade deficits.

Corroborating statistical evidence shows that high deficits and debt increase long run interest rates.

Its economy stayed stable in the 10 first years, then it faced difficulties due to the escalation of the Vietnam War, which led to unsteady economic growth, high state budget deficits, high inflation, and trade deficits.

They must also allow countries with high unemployment, like Spain, to continue running budget deficits.

Large budget deficits have led to high inflation in countries that are forced to create money to finance those deficits because they cannot sell longer term government bonds.

America s internal and external deficits remain large, and its unemployment rate is both high and rising.

In the 1980 s, Scandinavian countries stood for chronic budget deficits, high inflation, and repeated devaluations.

As Angela Merkel puts it, growth can t come at the price of high state budget deficits.

High budget deficits caused the 1998 Russian financial crisis and resulted in a further GDP decline.

Higher deficits, moreover, would cause the ratio of debt to GDP to rise from its already high level, which implies greater debt service costs and, therefore, even larger deficits.

A public debt crisis in Japan (as the combination of recession, deflation, and high deficits drove up the debt GDP ratio).

Or, if these deficits are monetized, high inflation may force up long term interest rates and again choke off economic recovery.

Japan s ability to sustain high fiscal deficits, low interest rates, and net capital exports has been possible because of its high private saving rate, which has kept national saving positive.

And it is true that some, like the Greek government, ran too high deficits during the good times and endangered their future.

(a) The economic conditions preceding the restructurings were generally characterized by a prolonged period of economic recession, accompanied by high budget deficits

Savvy investors, like frustrated voters, recognize that low growth and high unemployment actually enlarge deficits and add to debt in the short run.

The main concern is that left wing politicians will implement populist policies that will generate large fiscal deficits, high inflation, and, eventually, currency collapses.

Countries that substitute government spending for market spending either generate inflationary budget deficits, or end up with excessively high tax rates that destroy incentives.

Before Thatcher s premiership, Britain was widely considered the sick man of Europe afflicted by stifling regulation, high unemployment, constant strikes, and chronic budget deficits.

That is why risk premiums are continuing to fall in the eurozone, despite high political uncertainty in Italy and continuing large fiscal deficits elsewhere.

Loving America s Deficits

So deficits grow.

The fifth option is to tighten fiscal policy and reduce budget deficits with the aim of lowering the high interest rates that drive the inflows.

Although the capital stock will benefit from a higher household saving rate, the increase will be offset by more government dissaving as budget deficits remain high.

PARIS In difficult economic times like these, one principle should be given the same prominence as the headline grabbing issues of high deficits and austerity packages.

As a result, deleveraging remains a clear priority in a range of countries, reducing growth, with fiscal countermeasures limited by high or rising government debt and deficits.

Developing country central banks keep interest rates artificially low to ensure sufficient low cost financing for the public sector, while avoiding large fiscal deficits and high inflation.

We have vast budget deficits.

As time passes, deficits accumulate.

In retrospect, it is clear that some of the countries were allowed to join prematurely, when they still had massive budget deficits and high debt to GDP ratios.

In Europe, that means agreeing on burden sharing for re capitalizing countries where deficits and debt have cut off market access or led to prohibitively high borrowing costs.

Annual GDP growth slowed significantly in the last quarter, to 4.4 , consumer price inflation is high, and the current account and budget deficits last year were too large.

It should thus be obvious that banks should hold some capital against the risks they assume when lending to governments with particularly high debts or large budget deficits.

He rejected what he described as the European style of very large government and high tax rates and the American style of lower tax rates but large fiscal deficits, in favor of low budget deficits and a tax system that would promote opportunities for individuals and private enterprises.

Counter cyclicality does not mean running modest deficits in the good times and huge deficits in major downturns.

Attention switched to the problem of fiscal deficits and the relationship between deficits and economic growth. Should governments deliberately expand their deficits to offset the fall in household and investment demand?

It is important for policymakers and the public alike to understand the real fiscal outlook and the damage that high deficits will cause if prompt action is not taken.

STANFORD Around the world, raging debates about whether, when, how, and how much to reduce large budget deficits and high levels of sovereign debt are dividing policymakers and publics.

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