Understanding the Effects of Fiscal Deficits on an Economy

The Bottom Line
Deficits are seen in a largely negative light. While macroeconomic proposals under the Keynesian school argue that deficits are sometimes necessary to stimulate aggregate demand after a monetary policy has proven ineffective, other economists argue that deficits crowd out private borrowing and distort the marketplace.
Still, other economists suggest that borrowing money today necessitates higher taxes in the future, which unfairly punishes future generations of taxpayers to service the needs of (or purchase the votes of) current beneficiaries.
If it becomes politically unprofitable to run higher deficits, there is a sense that the democratic process might enforce a limit on current account deficits.