Buiter Says Markets Will Punish Treasuries for 'Unsustainable' Deficit

The video discusses the potential economic impact of a US government shutdown, emphasizing that a second shutdown could cause more damage than the first. It highlights concerns about the US deficit, which is unsustainable at 6% of GDP, and compares it to Europe's lower deficit. The discussion also touches on the concept of secular stagnation, where high debt levels can dampen productivity and innovation, leading to weaker economic growth.

What is the potential impact of a second government shutdown in the US?

• It would only affect government employees.

• It would boost the economy.

• It would cause more damage than the first shutdown.

• It would have no significant impact.

Why is the US deficit considered unsustainable?

• Because it is not a concern for the markets.

• Because it is a structural deficit.

• Because it is at full employment.

• Because it is below 3% of GDP.

How does the US deficit compare to Europe's deficit?

• The US deficit is lower than Europe's.

• The US deficit is the same as Europe's.

• The US deficit is not comparable to Europe's.

• The US deficit is higher than Europe's.

What is the relationship between government debt and private demand?

• Government debt decreases private demand.

• Government debt has no effect on private demand.

• Government debt only affects corporate demand.

• Government debt increases private demand.

What does Larry Summers' idea of secular stagnation suggest?

• Debt leads to increased innovation.

• Debt has no impact on economic growth.

• Debt contributes to weaker economic growth.

• Debt eliminates the need for government intervention.