Conventional wisdom has it that large deficits in the United States budget cause interest rates to rise. Two main arguments are given for this claim. According to the first, as the deficit increases, the government will borrow more to make up for the ensuing shortage of funds. Consequently, it is argued, if both the total supply of credit (money available for borrowing) and the amount of credit sought by nongovernment borrowers remain relatively stable, as is often supposed, then the price of credit (the interest rate) will increase. That this is so is suggested by the basic economic principle that if supplies of a commodity (here, credit) remain fixed and demand for that commodity increases, its price will also increase. The second argument supposes that the government will tend to finance its deficits by increasing the money supply with insufficient regard for whether there is enough room for economic growth to enable such an increase to occur without causing inflation. It is then argued that financiers will expect the deficit to cause inflation and will raise interest rates, anticipating that because of inflation the money they lend will be worth less when paid back.

Unfortunately for the first argument, it is unreasonable to assume that nongovernment borrowing and the supply of credit will remain relatively stable. Nongovernment borrowing sometimes decreases. When it does, increased government borrowing will not necessarily push up the total demand for credit. Alternatively, when credit availability increases, for example through greater foreign lending to the United States, then interest rates need not rise, even if both private and government borrowing increase.

The second argument is also problematic. Financing the deficit by increasing the money supply should cause inflation only when there is not enough room for economic growth. Currently, there is no reason to expect deficits to cause inflation. However, since many financiers believe that deficits ordinarily create inflation, then admittedly they will be inclined to raise interest rates to offset mistakenly anticipated inflation. This effect, however, is due to ignorance, not to the deficit itself, and could be lessened by educating financiers on this issue.

The author uses the term "admittedly" (see highlighted text) in order to indicate that

the second argument has some truth to it, though not for the reasons usually supposed

the author has not been successful in attempting to point out inadequacies in the two arguments

the thesis that large deficits directly cause interest rates to rise has strong support after all

financiers should admit that they were wrong in thinking that large deficits will cause higher inflation rates

financiers generally do not think that the author's criticisms of the second argument are worthy of consideration






逻辑结构(Logical structure)






C选项:赤字会直接引起利率的上升这个理论毕竟还是有强烈的支持的。这个选项较易误选。其说出了让步这一点,但是没有理由认为第二论点有强大的支持,文中也提到了这句话来否认这一观点“Currently, there is no reason to expect deficits to cause inflation. ”




登录注册 后可以参加讨论