Let's do another Delong

Right now, the financial markets are telling us that for the next 20 years at least they expect not a surplus but rather a shortage of federal debt.

No, this chart says deflation.

The interest rates at which investors are willing to hold federal debt now and expect to hold federal debt in the future tell us that it is an extraordinary valuable asset

A valuable asset as measured in dollars, which is the unit by which these bond pay dividends. It is valuable because they are a promise from the same government that runs the central bank.

Those interest rates tell us that investors at least think the world economy would be better off with more federal debt than with less.

Horse manure. Investors are telling they will be better off than non investors when the central bank devalues.

A larger debt right now would enrich the present at the expense of the future, but (unless there is some global warming catastrophe coming) the future will be richer than the present, so this is not a big worry.

Pure fantasy. A larger debt right now will insure the wealthy against the pitchforking masses.

When debt is a source of uncertainty and a drag on the economy, its value is low in the interest rates people required to hold it is high.

The value is not low, Brad, look again at the friggen chart and see that the value is right in line with a declining trend.

The future is unpredictable, and interest rates could spike, and the burden of amortizing the government debt could rise substantially from its current near-zero level.

Is that the same story you told Europe in 2010, and now you repost Simon Lewis article showing they paid to high a yield in the debt they contracted. You make up stories to fit your priors, that is not science.

The past hundred years have demonstrated that the United States government is very good at paying down the debt as a share of annual GDP whenever you can argue that it makes economic sense to do so.

Bull shit. Nixon effectively devalued the dollar in 1971, Mexico did it in 1997, and Roosevelt did it in 1932.

The big question right now is not “should we fear a debt crisis?” but “how can we use the borrowing capacity of the U.S. government and the extraordinary terms on which investors are willing to lend money to the U.S. to benefit America?”

What debt capacity, lets look at interest rate volatility, shall we?

Look at the friggen chart you poor excuse for an economist.  See that vibration at the end, notice it? Oddly enough that is coming at the point where we are at a deflation, a deflation mainly because some 2.5% of the economy is devoted to federal interest payments.  This chart says disaster, a disaster caused by too much debt. If we did not have too much debt then why did the federal reserve have to buy bonds?

The UC Berkeley economics department is a disgrace, shut it down.