But who cares what Wall Street and its investors think? Well, apparently many Democrats. They keep pointing to the quiescent bond market and low interest rates as evidence that Washington can rack up trillions in additional debt with no downside. And now that Trump is out of office, a rising stock market is seen as proof that Bidenonomics will keep the economy on the mend. But they should consider that investors aren’t assuming Full Bidenomics to happen. And that’s not just for the stimulus. The big banks are also skeptical that taxes will be raised to the levels proposed during Biden’s presidential campaign, nor his other spending proposals funded at levels suggested in his campaign agenda.

We need to keep two things in our head at the same time. First, now isn’t the time to freak out about budget deficits and start a push for rapid austerity. Yet deficits and debt are still important policy constraints outside the cartoon world of econ Twitter. While we may not know how much debt is too much, we should not proceed — with federal debt levels already historically high — as if such a limit does not exist for all practical purposes. Policymakers would be wise to assume Econ 101 is still in effect: Over the long run, bigger deficits reduce national saving and thus the funds available for productive private investment. And while interest rates are low, it’s also risky to assume they would stay low even in the face of rising inflation from, say, injecting massive fiscal stimulus into an economy already booming.