James K. Galbraith presents a fine defense of deficits on the opinion pages of today's SF comical in which he gives us all a clue as to the reason why financial markets are so worried about the government borrowing:

There are two ways to get the increase in total spending that we call "economic growth." One way is for government to spend. The other is for banks to lend.

For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. Ordinary people benefit, but there is nothing in it for banks.

And this explains the deficit phobia of Wall Street. Bankers don't like budget deficits because they compete with bank loans as a source of growth. When a bank makes a loan, cash balances in private hands also go up. But now there is a contractual obligation to pay interest and to repay principal. If the enterprise defaults, there may be an asset left over - a house or factory or company - that will then become the property of the bank.

But that is not all. Galbraith did not mention that, although banks are stuffed up plump with tons of zero cost cash from the Fed and from individual savings, they are not lending this cash out to potential investors. They just can't be bothered.

But if they don't want to profit from making loans no one else should be able to use the resources either.