If you're growing, if your economy is growing in real terms, ester than the debt, then you can grow your way out of any debt. But there's another side of it, and that's, how rapidly are you taking on new debt? So even though our economy was growing nicely, more rapidly than the rate of interest that the government was paying on the debt, we were adding new debt so rapidly that the debt income ratio is going up instead of down. Just keep on ploughing straight ahead. Let the clock tick....
Benjamin Friedman has been a leading macroeconomist since the 1970s, whose accomplishments include writing 150 papers, producing more than dozen books, and teaching Tyler Cowen graduate macroeconomics at Harvard in 1985. In his latest book, Religion and the Rise of Capitalism, Ben argues that contrary to the popular belief that Western economic ideas are a secular product of the Enlightenment, instead they are the result of hotly debated theological questions within the English-speaking Protestant world of thinkers like Adam Smith and David Hume.
Ben joined Tyler to discuss the connection between religious belief and support for markets, what drives varying cultural commitments to capitalism, why the rate of growth is key to sustaining liberal values, why Paul Volcker is underrated, how coming from Kentucky influences his thinking, why annuities don’t work better, America’s debt and fiscal sustainability, his critiques of nominal GDP targeting, why he wouldn’t change the governance of the Fed, how he maintains his motivation to keep learning, his next big project on artificial intelligence, and more.
Read a full transcript enhanced with helpful links, or watch the full video.
Recorded December 4th, 2020 Other ways to connect