Bret, a timely posting. I thought you might be interested in what Alan Greenspan has to say about deficits.
What you describe is clever, but I'm skeptical. It seems like a Ponzi scheme to me, and I suspect (but couldn't begin to prove without a whole lot more time to devote to it) that the success of it has a lot to do with the velocity of money and stability in growth. Again, I suspect that while the numbers might work out on paper as you suggest, in the real world, changing perception of risk could lead to instability, crisis, and a long period of economic pain. Not to say that this should be avoided at all costs. Who's to say we aren't better off today as a result of the restructuring and more enlightened trading policies that were precipitated by the Great Depression? But, nobody could get elected advocating a willingness to increase the risk of crisis for the sake of the presumed benefits it might precipitate.
I sometimes wonder though if that is why war is so much a part of the human character. As WWII demonstrates, the sacrifice of 45 million or so people was just enough shock to cause a new, better paradigm to emerge among the nations of western Europe and Japan. I remain committed to the proposition that there must be a better way to succeed with systemic adjustment without human catastrophe.