Sharknado: The Deficit Spending We Need

Sharknadoes have struck thrice in the last 3 years, with a 4th coming tonight. In that time Los Angeles, New York City, and the entire Eastern Seaboard have been destroyed. These would be devastating natural disasters for the country. Hurricane Sandy caused approximately $75 Billion in damage from landfall in the NYC area. A Sharknado could well have been more costly… due to the sharks. In total this means we have witnessed, over three sharknadoes, damage in the hundreds of billions. On top of these headline numbers, natural disasters come with secondary impacts to the economy. It has been conjectured by some that the United States federal government would step up with emergency spending to avoid the lengthy court battles over whether damage was caused by weather (covered by insurance) or sharks (unlikely to be).[citation needed]

The US Government would have to issue more debt in order to afford this emergency aid. It is argued by many that increased government spending is contractionary during normal economic times. However, many prominent economists are arguing we are no longer in normal economic times. Larry Summers and Paul Krugman have been saying that we may have entered a period of secular stagnation, that is, a time where the growth in the economy naturally tends downward or flat. Japan has been fighting this economic environment for the last quarter century. During secular stagnation, government spending can be stimulative. Under such a circumstance, the Sharknado Stimulus could well be a net (long-term) benefit to the economy.

Of course, debt that is issued eventually comes due. And it needs to be paid with interest. So, in theory, there is a risk that we would be strengthening the current economic environment at the expense of our children. However, interest rates for government debt are at historic lows. Adjusted for inflation, the United States government would pay out less in the future than it borrows today. This amounts to investors paying the United States to take their money and keep it safe (some conjecture it is from fear of sharknadoes[citation needed]).

The Sharknado Stimulus is just one of many ways sharknadoes impact the United States economy. In this election year I call on all candidates for the presidency to release detailed proposals on how they will deal with the sharknado threat, both as a natural disaster and as an economic force. It is time we know if our politicians will fight for the economy after fighting the sharknado.