Kevin Drum begins this post by making a point I have made forever -- that selling debt to Chinese investors does not somehow put the US in China's power. In fact, one can argue just the opposite, that Chinese policy options vis a vis the US are circumscribed to some extent by the desire to get paid back on all this lending some day.
However, he goes on to make this incredible statement:
Rising U.S. debt hasn't caused inflation. It hasn't sent interest rates skyrocketing. It hasn't reduced Chinese demand for American bonds. It hasn't reduced demand for long-dated bonds. Really, it hasn't done any of the things that conservatives have been predicting with apocalyptic fervor for the past four years.
I am left agog at the incredible blindness of this position, and find it intriguing how it contrasts with Drum's position on rising atmospheric CO2 levels. In the latter case, he constantly argues that lack of warming today is not an excuse for inaction, that CO2 is dangerous and its production must be greatly curtailed. He takes this position despite any real historic evidence of harm from CO2 levels -- ie future harm is hypothetical and without precedent. But still he wants action now.
On the other side, there is plenty of historical evidence for what rising deficit spending and government debt will do to a country and an economy. Heck, you don't even have to look at history -- it is being pushed in our face every day by Greece and Spain and Italy. And yet he councils full steam ahead.
Even most climate skeptics (including myself) would not make a statement about CO2 as denialist as Kevin Drum makes about debt. We acknowledge CO2 is rising, believe it has some impact on rising temperatures, but differ from the most alarmist in the amount of future temperature increases expected. We expect more modest anthropogenic temperature increases that make more sense to deal with by adaption -- but we don't generally deny its effect altogether (crazy talk show host and a few prominent bloggers notwithstanding).
Postscript: The Weimar Republic went from relative normalcy to hyperinflation in less than three months, the time between two quarterly meetings of the Fed. In Europe, one day there was no problem in Greece and Spain and Italy and a day or a week later, boom, the crisis is upon them.