Targeted Deficit Financing (Democratic Technologies)

No deficit financing program can be evaluated positively using the United States with the current debt: GDP ratio at 120%, estimated to be closer to 130% by decade end, but when federal debt is adjusted down to 60% GDP, it produces much better outcomes for the federal jurisdiction. The European Union has a 60% threshold for member states, adding credibility to the hypothetical simulation. A conventional deficit spending program will always result in a dangerous escalation in debt servicing costs for only moderate increases in GDP growth. Innovations in public finance, such as sovereign wealth funds and other permanent fund technologies, permit the government to prepay the deficit finance into interest-bearing accounts, cutting the total accumulated debt in half or doubling the annual amount of deficit spending for the same amount of debt.When a 3% GDP targeted deficit financing program uses permanent fund technologies, like future funding, the outcomes for both strategies, over all periods, outperform balanced budget strategies on every performance measure. Full contribution targeted deficit programs carry more systemic interest rate risk but are estimated to produce more proportional GDP growth than debt servicing costs than half contribution deficit financing strategies, suggesting they are strictly superior in the more important measures. Full contribution deficit financing produces surplus revenues to current programmatic obligations in the budget for the current administration and Congress to allocate towards durable purchases, such as infrastructure or dedicated permanent funds, without obligating future budgets to any spending decisions in the current year. Read more