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a loan is predicated on the idea that the loaned money will be invested in wealth producing ventures, enabling a payback of principle + interest later. this is

a loan is predicated on the idea that the loaned money will be invested in wealth producing ventures, enabling a payback of principle + interest later. this is counter to the digging holes and filling them in bit, unless you plan on heavily taxing anyone who took assistance later on to make up for it. in which case again, why make them dig holes? in the other case, where investment is made in a wealth producing venture, why is government needed? the only reason money isn't available for sound investment will be due to malinvestment brought about by shitty incentives in the first place. also, WRT transferring future wealth to the present:http://unqualified-reservations.blogspot.com/2008/09/maturity-transformation-considered.html http://unqualified-reservations.blogspot.com/2008/09/maturit...

chancho 17y ago
Not to pile on, but I think you really are missing the point. The point of the current deficit spending (taking out loans) is not to invest in something that will create wealth later, it's to prevent the destruction of wealth now. That's what he means when he says it's "counter-cyclical" spending. We're smoothing out this negative GDP bump now by borrowing from a future positive GDP bump. You spend now to prevent a depression. When you pay the loan back you break even at best, probably lose a little, but it's better than not doing anything at all. If you don't agree with this kind of macroeconomic reaction then that's the argument you should be making. To disagree with these loans because they can't possibly turn a profit just misses the point.
- nazgulnarsil 17y ago
  okay so the premise is that the government spending prevents a depression. this is based on an aggregate demand theory of the business cycle. since i'm supply side I doubt a debate would be very productive. neither one of us is going to budge the other from their axiom. I've tried to understand demand side economics and I can't.

chancho 17y ago

Not to pile on, but I think you really are missing the point. The point of the current deficit spending (taking out loans) is not to invest in something that will create wealth later, it's to prevent the destruction of wealth now. That's what he means when he says it's "counter-cyclical" spending. We're smoothing out this negative GDP bump now by borrowing from a future positive GDP bump. You spend now to prevent a depression. When you pay the loan back you break even at best, probably lose a little, but it's better than not doing anything at all. If you don't agree with this kind of macroeconomic reaction then that's the argument you should be making. To disagree with these loans because they can't possibly turn a profit just misses the point.

nazgulnarsil 17y ago
okay so the premise is that the government spending prevents a depression. this is based on an aggregate demand theory of the business cycle. since i'm supply side I doubt a debate would be very productive. neither one of us is going to budge the other from their axiom. I've tried to understand demand side economics and I can't.