The following are in response to Robert Huebscher’s article, The Misreading of Reinhart and Rogoff, which appeared last week:
I am writing to thank you for your excellent essay.
Your piece serves your readership in two valuable ways.
First, it corrects a common (and regularly repeated) misperception of the two academics' work. As a side note, the care you took in presenting your argument is commendable. It is rare that commentators go to the lengths you did, basing your arguments on primary documents and direct contact with the authors.
Second, near the end of your essay, you reach an important conclusion – and in my own opinion, the right one – based on the proper interpretation of Reinhart and Rogoff's work. That conclusion is that "the nature of the deficit matters," and "to accept that our government must embark on a series of initiatives large enough in scope to restore the country to full employment." This conclusion has important implications for both policy debates and investment strategies.
I imagine that I share with your readership a general fear over the size and entrenched nature of the U.S. fiscal deficit. I believe we all intrinsically know that "this time it is not different."
Nevertheless, you are correct to advance the idea that not all deficits are created equal: some have the capacity to restore growth and employment. Further, you recognize that at this moment in our nation's history, the imperative to restore full employment may supersede the objective of reducing deficits. In my own view, restoring full employment – in particular, reducing the large ranks of unemployed and underemployed young people – will ultimately do more to cure the country's long-term debt problems than short-term deficit reduction. My hope is that the nation's political debates about the deficit will grow less shrill, and as you aptly stated, that "we heed the lessons of the Industrial Revolution and the Great Depression."
Thank you for (yet another) interesting essay.
Seafarer Capital Partners, LLC
Larkspur CA 94939
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