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Where does this economic theory come from? If the government cuts expenditures to pay the debt, then more people are without a job or without services. Therefo

by nanairo 16y ago

Where does this economic theory come from? If the government cuts expenditures to pay the debt, then more people are without a job or without services. Therefore the economy cools down and the government gets even less money from taxes. At which point they may not be able to pay the debt, so they need to take more cuts and so on. That's what happened to Argentina a few years back, and I think (though I may be wrong) it's what has happened to Ireland now. The problem you have in the USA is that what should be done is government taking debt to support the economy in the bad days and paying it off in the good ones. But unfortunately the Repubblican are suggesting exactly the opposite: they wasted a surplus and got you a huge debt when the economy was doing fine, and now that's in a mess they want you to cut expenditures.

stretchwithme 16y ago
Is it the government's job to ensure that everyone has a job? Should it be hiring everyone? Where does this economic theory come from? And why is its logic never questioned? Yes, the government can continue to borrow massively to spend so much that everyone has a job and subsidize lending so that otherwise unviable economic activity occurs. But this is the economic thinking that produced the housing bubble and the dot com bubble before it, both of which left economic disasters in their wake. More of the same faulty action will not resolve the underlying massive structural problem being created. Some day, the bill will come due for borrowing trillions that do not result in an improvement in our ability to produce products and services the world is willing to pay for. Both parties have wasted massive amounts of money on things which add no value. The difference between Argentina and the United States is that the US has far greater wealth and ability to borrow and thus can piss away vastly greater amounts before the bill comes due. The government is like a rich child that is never disciplined by his parents. Its easier to throw money at all of the problems created than to impose the same discipline that created the wealth in the first place. Yes, more people will be without jobs. But the
- stretchwithme 16y ago
  continuing: But the current economic disaster is the result of previous attempts to "create jobs" through stimulus. So the choice is simple. More phony makework jobs now, with more economic instability and joblessness later. Or an admittedly painful end to the phony economy and a return to creating wealth by producing things people are willing to pay for, followed by greater stability. Getting off many drugs involves painful withdrawal. But it is the only way to get straight.
- nanairo 16y ago
  I don't think it's the government job to grant everyone a job (at least in the USA, in other countries it is). But that wasn't my point. What is important for a country is the ratio of debt to GDP. Currently if you keep cutting like this the debt may decrease, but the GDP will have decreased so much more than it will be HARDER and not EASIER to pay the debt. Government economics are not the same as household economics. When the economy is picking up steam, then the government can start to withdraw support.

by nanairo 16y ago

stretchwithme 16y ago

Is it the government's job to ensure that everyone has a job? Should it be hiring everyone? Where does this economic theory come from? And why is its logic never questioned? Yes, the government can continue to borrow massively to spend so much that everyone has a job and subsidize lending so that otherwise unviable economic activity occurs. But this is the economic thinking that produced the housing bubble and the dot com bubble before it, both of which left economic disasters in their wake. More of the same faulty action will not resolve the underlying massive structural problem being created. Some day, the bill will come due for borrowing trillions that do not result in an improvement in our ability to produce products and services the world is willing to pay for. Both parties have wasted massive amounts of money on things which add no value. The difference between Argentina and the United States is that the US has far greater wealth and ability to borrow and thus can piss away vastly greater amounts before the bill comes due. The government is like a rich child that is never disciplined by his parents. Its easier to throw money at all of the problems created than to impose the same discipline that created the wealth in the first place. Yes, more people will be without jobs. But the

stretchwithme 16y ago
continuing: But the current economic disaster is the result of previous attempts to "create jobs" through stimulus. So the choice is simple. More phony makework jobs now, with more economic instability and joblessness later. Or an admittedly painful end to the phony economy and a return to creating wealth by producing things people are willing to pay for, followed by greater stability. Getting off many drugs involves painful withdrawal. But it is the only way to get straight.
nanairo 16y ago
I don't think it's the government job to grant everyone a job (at least in the USA, in other countries it is). But that wasn't my point. What is important for a country is the ratio of debt to GDP. Currently if you keep cutting like this the debt may decrease, but the GDP will have decreased so much more than it will be HARDER and not EASIER to pay the debt. Government economics are not the same as household economics. When the economy is picking up steam, then the government can start to withdraw support.