4 ms·

You make it sound like a law of nature when it really isn't. Look at Italy for a prominent counter example.

• WalterBright 5y ago
  It is a law of nature. There ain't no such thing as a free lunch. That stimulus check you got? Now you have the hangover. Didn't Italy get the Germans to take the fall for their deficits a few years ago?
  • bruce511 5y ago
    Deficit spending benefits from inflation. The value of loans decrease as a currency value decreases. So a govt can get $1 of value with each $ spent now, and pay less paying off the loan later. Put another way, if inflation is 10% then you get 10% more tax dollars in, to offset the loans. Of course _never_ actually paying them back is even cheaper :)
    • anonuser123456 5y ago
      Sure, for past loans this is true. But for governments that run perpetual deficits, they have to go out to the market to service ongoing obligations. As some point the market catches on and interest rates snap upward, leading to increased real costs of financing debt.
      • gizmo686 5y ago
        Interest rates are a policy decision by the federal reserve. Maintain a debt instead of printing money is a policy decision by Congress. In practice the government going into debt denominated in its own currency, and printing more of its own currency are essentially the same thing. Mechanically, when the interest rates go higher the Fed policy, the fed just buys the debt itself, driving up the market price (therby down interest rate). In effect, this converts US debt into cash. Similarly, they can sell treasury debt, driving up the interest rate. It is just a quirk of bookkeeping that the we keep track of how much money the treasury owes the federal reserve.
  • labster 5y ago
    Wait. That’s a double negative, so there is free lunch after all?
    • chitowneats 5y ago
      How clever! You really showed him.
      • labster 5y ago
        Thank you. I am so smart.
  • nemothekid 5y ago
    >That stimulus check you got? The stimulus check represented 804 billion dollars in direct to citizen spending of the government's 6 trillion dollars in spending. If your argument is "giving money directly to individuals causes inflation" we can start there, but government spending alone does not cause inflation; the Emergency Economic Stabilization Act did not meaningfully grow inflation. We probably would not know fully in 5-10 years, but my own hypothesis is that America had it's own dark labor pool of incredibly cheap labor and when (1) Citizens were allowed to have some breathing room and look for better oppurtunities and (2) the CBP used Covid to massively ramp up deportations, labor became more expensive which clearly affected the rest of the economy.
    • WalterBright 5y ago
      > but government spending alone does not cause inflation I didn't say that, either. I was clearly talking about deficit spending.
      • nemothekid 5y ago
        This isn't a meaningful distinction. The United States has been deficit spending since 9/11, and the last large deficit spending was the 2008 crisis, which did not lead to any meaningful inflation.
        • deleted 5y ago
          [deleted]
        • WalterBright 5y ago
          I seem to recall many of those giant loans were paid back. That isn't inflationary.
          • deleted 5y ago
            [deleted]
          • nemothekid 5y ago
            This seems like its going to be a continual moving of goal posts until there is no data to back any position. Before the loans were paid back, inflation went negative. To be clear, I'm not arguing that the government can and should spend their way out of any crisis; the point I'm trying to get across, which you keep evading is that there is no data to back your claim that government spending led directly to inflation, especially when there are so many other obvious factors. In fact, before 2020, there is no modern economy where you could clearly point to and say "the government overspent, and caused massive inflation". Japan desperately tried to spend it's way to inflation and failed. For something that is a "law of nature", there seems to be so few data points to back it up. As far as I can tell, it's a neoliberal talking point used to dissuade any form of direct to citizen welfare.
  • bryanrasmussen 5y ago
    given that payment means giving something of value you would rather not part with it is clear that at the micro-level there may well be free lunches, which I find amusing because obviously the idea of the free lunch comes from the micro-level. If Italy really got the Germans to take the fall for their deficits a few years ago and suffered no negative effects from it then there would be a free lunch at the macro level as well, although I find that unlikely.
    • WalterBright 5y ago
      > suffered no negative effects from it Nobody said they didn't suffer negative effects from it.
      • bryanrasmussen 5y ago
        I know, I was wondering, if they did suffer negative effects for it then it was the obvious no free lunch. Reconsidering things on the macro level I think while there may be no free lunches there are obviously lunches that coincidentally may be so cheap that they are next to free. For example: aid received from France by Americans during Revolutionary War, treaties signed said supposed to be paid off by Americans siding with France in case of war between France and England, but since French Government changed since time of treaty signing when war came America said oops sorry, we're staying out. That was a really cheap lunch.
  • barrenko 5y ago
    Don't bother, it's easier to talk about religion.