Wealth & Money Quote by William Vickrey

Vickrey’s line is a neat pin to pop a political balloon: the comforting morality play where deficits are “bad,” surpluses are “good,” and prices obediently follow. He’s not defending permanent red ink so much as rejecting the lazy shortcut that treats the government’s ledger like a household checkbook. The bite is in “in themselves.” Inflation isn’t a character flaw; it’s an outcome of conditions - how much spending is chasing how much capacity, what the central bank is doing, where supply shocks land, how expectations harden. A deficit can be benign in a slack economy and explosive in an overheated one; a balanced budget can coexist with inflation driven by oil spikes, monopoly pricing, war, or a wage-price spiral.

The subtext is aimed at the ritualized deficit panic that substitutes austerity for analysis. Vickrey, a Nobel-winning economist and a leading voice in public finance, spent a career arguing that fiscal policy is a tool, not a vow. In the late 20th-century U.S., budget balance was increasingly marketed as proof of seriousness - a technocratic halo - even as the era’s inflation story was shaped by energy shocks, deindustrialization pressures, and the Volcker Fed’s aggressive tightening. Vickrey’s warning lands as a critique of symbolic budgeting: politicians promising “stability” through accounting rather than through the harder work of managing demand, investment, and productive capacity.

It works because it refuses a slogan war. Instead, it forces the listener to admit the messy truth: price stability is a systems problem, and the budget balance is only one variable - sometimes relevant, often not decisive, never automatically virtuous.