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Trillion dollar deficit means there are a trillion dollars extra floating around in the private sector. Trillion dollars more in people's bank accounts. If ther
by mempko 8y ago
Trillion dollar deficit means there are a trillion dollars extra floating around in the private sector. Trillion dollars more in people's bank accounts. If there was no deficit spending, there would not be money floating around in circulation that isn't debt issued bank notes.
- zozbot123 8y agoExactly. And all this money sloshing around is what leads to inflation, so the central bank has to make up for it by doing things like "tapering" QE, raising interest rates, and generally crashing the economy.
- AimForTheBushes 8y agoOnce the deficit eclipses the total GDP it won't matter if there is extra money floating around because inflation will spiral.
- millstone 8y agoDid you mean debt? The deficit is nowhere close to GDP. Japan has a much higher debt to GDP ratio than the US, and inflation of <1%.