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Stockman: Why Deficits Didn't Matter During The Age Of Monetization, 1987-2017 (But Do Now!)

• zerohedge.com by David Stockman

So doing, they drastically and dangerously falsified the market for government finance by weaning politicians of the one element that kept modern Big Government fiscally contained

We are referring to the historical fear among politicians that fiscal deficits cause "crowding out" of private investment and rising interest rates. Indeed, that  proposition was universally understood during your editor's sojourn in the Imperial City between 1970 and 1985 as a staffer, Congressman and budget director.

As it has turned out, however, there was implicitly a crucial qualifier. To wit, it was naturally assumed that fiscal deficits would be financed in honest capital markets, and that yields in the bond pits were free market prices which cleared the balance between the supply of private long-term savings and the demand for term debt.

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