4 ms·

All of this is clear to me and pretty obvious. My point was that the following paragraph from GGP is contradictory: > There is no limit to how much money it ca

All of this is clear to me and pretty obvious. My point was that the following paragraph from GGP is contradictory: > There is no limit to how much money it can spend. Any discussion of budgets at that level in terms of deficits etc. is completely flawed, and not just because a lot of politicians are extremely hypocritical about it, but because it just makes no sense in terms of economics and finance. > When thinking about the spending and taxation of a monetarily sovereign governments, the only real constraint is inflation.

slfnflctd 9y ago
A tad bit pedantic, but I see your point that "There is no limit" and "real constraint" are in opposition. I think the comment was just trying to say there is no fixed ceiling.
nhaehnle 8y ago
Different kinds of limits and constraints. I may not have made that perfectly clear in my original comment, but on the other hand, the real meaning should have been obvious if you had used a generous reading of what I wrote. The point is that in the typical political discourse, people extrapolate their own personal experience to government. They seem to think that if the government spends too much, then at some point it will literally be unable to spend more -- and that's just wrong. Inflation doesn't change that. Inflation is simply the answer to the obvious question that comes next. After all when you tell people the truth that government has no limit to how much it can spend, they tend to become understandably suspicious. TANSTAAFL and all that. Inflation doesn't affect how much money the government is able to spend, but it does affect whether more (net) spending is a good idea, so it is a constraint in that sense. But it's qualitatively very different from the entirely fictional budget constraint that most people seem to be worried about.

4 ms·

All of this is clear to me and pretty obvious. My point was that the following paragraph from GGP is contradictory: > There is no limit to how much money it ca

by spdionis 9y ago

slfnflctd 9y ago
A tad bit pedantic, but I see your point that "There is no limit" and "real constraint" are in opposition. I think the comment was just trying to say there is no fixed ceiling.
nhaehnle 8y ago
Different kinds of limits and constraints. I may not have made that perfectly clear in my original comment, but on the other hand, the real meaning should have been obvious if you had used a generous reading of what I wrote. The point is that in the typical political discourse, people extrapolate their own personal experience to government. They seem to think that if the government spends too much, then at some point it will literally be unable to spend more -- and that's just wrong. Inflation doesn't change that. Inflation is simply the answer to the obvious question that comes next. After all when you tell people the truth that government has no limit to how much it can spend, they tend to become understandably suspicious. TANSTAAFL and all that. Inflation doesn't affect how much money the government is able to spend, but it does affect whether more (net) spending is a good idea, so it is a constraint in that sense. But it's qualitatively very different from the entirely fictional budget constraint that most people seem to be worried about.