I just read a very interesting post over at Lex's place. In a nutshell it says that right now it would be cheaper for the government to borrow money to complete infrastructure projects than it would be to wait and pay cash later. Sounds crazy right? Here's the scoop:
Karl Smith, an assistant professor of public economics and government at UNC, makes a counterintuitive but deeply important point: Because the real (i.e., inflation-adjusted) rate of return on 5-year Treasury notes is currently negative, it would be cheaper to do the work now, with borrowed money, than it would be to pay cash later on.
As a person who struggles understanding accrual accounting, much less economic theory, I find this theory hard to wrap my brain around but I have to say that even I can see the logic in using money that's cheaper than cash.