I actually agree with a lot of his conclusions, but his ideas seem crazy to me all the time. Have Krguman on or Brad Delong.
Point 1: Ravi Batra seemed to say when the deficits go down, the economy will crash.
Tell that to Bill Clinton.
Deficits are a small percent of GDP and hence a small percent of wages - can not possibly explain the productivity gap - the difference between wages and productivity since the 1980's.
Deficits are a symptom, not a 'cause'. Deficits are a function of government spending and taxes. But they also grow automatically during recessions since income falls and hence tax revenues fall. And, welfare payments rise. To say that if deficits fall then the economy falls is really bizarre.
Point2: Ravi also said the multiplier is smaller now because of Debt in reference to Keynesian economics. Debt is not part of Keynes' model, nor does it make an appearance in most introductory textbooks that teach the so-called 'Keynesian' model. Thom's point is much more to the point - all the dollars we spend now go outside the US. This is the so-called effect of the "foriegn trade" multiplier which is often taught in introductory classes. It is also important to point out that the multiplier only 'works' if there is unemployment - otherwise it simply ends up increasing prices. The idea that we can know exactly what the multiplier is - 1.5 or 1.8 is not the point.
Point3: Why we have a debt based monetary system. Tom's other economist guest is technically correct - the government could simply print the money it needs, pay off the debt and that's that. The reason we don't do this is because the market for treasuries is a check on printing too much money. If people willingly hold bonds that means are money supply is solid. It also means that people forgo current consumption to hold money. This reduces any inflationary effect printing money might cause. The cost, is of course, 300 billion in interest and climbing. I'm not sure what side I am on on this issue, but those are the complexities as I see them.