According to the traditional (crowding-out)view,large budget deficits during normal times will lead to

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According to the crowding-out view, large budget deficits during normal times will lead to a smaller capital stock in the future. This happens because the government's borrowing to finance the budget deficit will reduce the amount of funds available for private investment, which lowers the capital stock and decreases long-term economic growth. Bank failures, lower interest rates, and a bankrupt government are not the direct consequences of budget deficits according to the traditional crowding-out view.

According to the Traditional (Crowding-Out)view,large Budget Deficits During Normal Times