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points to US's rapidly escalating debt ... and explain why again this is a problem? Unfortunately, the majority of commentators just take "high debt = bad" as

points to US's rapidly escalating debt ... and explain why again this is a problem? Unfortunately, the majority of commentators just take "high debt = bad" as a given, because they confuse their own situation (private household, currency user) with that of the US government (currency issuer). The US situation basically boils down to: the rest of the world has been crazy for US$ for some time and is therefore willing to send real goods to the US in exchange for numbers in a computer system. This is certainly going to change in the long run. That will drive down US imports and make imported goods more expensive for US residents, but that's only fair. It won't lead to collapse. In fact, if it is semi-intelligently managed, it could lead to a rebirth of US industry.

tomjen3 15y ago
Because the US has to pay interest on the loans. And because while you and I have no problem with the idea of saving for retirement, saving and buying that car in a few years, creating a college fund for the children before they are even born, etc, the US is run by politicians and politicians don't give the rear-end of that prostitute they are fucking about what happens after the next election. So they will spend the money on frevious things.
- scarmig 15y ago
  What do you specifically even mean for the United States as a society to "save" money? Getting dollar bills and stuffing them into a vault? Are you saying that in an ideal world without feckless politicians, the government should tax more than it disburses, build up a pile of money, and then pay out extra money? The further you draw the analogy out, the more ridiculous the idea of equating government finances with household finances become. It's just folk economics. And that's ideology-neutral: you can be a Keynesian, monetarist, goldbug, whatever and still should reject that position.
  - Symmetry 15y ago
    Generally speaking, when a country saves it takes money and invests it in things that will make more money, like factories or research. The reason that China is growing so fast right now is that it has a very high savings rate. On the other hand, there are less obvious good places to invest money in a developed economy.
    - nhaehnle 15y ago
      No, that is a misunderstanding. What gp was talking about was a government surplus, which means government spending (investment + consumption + social) is smaller than government revenue (taxation). So in fact, with the kind of government surpluses that some (horribly misled) people are demanding, money will be sucked out of the private sector which will ultimately lead to less economic activity than otherwise. There is no sense in which the government can save money like you and I, because the government is the currency issuer. It has an infinite stockpile of potential money anyway, adding to that stockpile is entirely useless.
- pessimizer 15y ago
  Currently, that interest rate is negative.
meric 15y ago
I didn't say Keynesian would cause economy to collapse. I am just saying it does not achieve its goal of smoothing out boom and busts because it requires too much competence from the governors of the economy Keynesian is saving money during booms and spending money during recessions. Yet during booms the money saved is too little and during recessions the money spent is too much. The debt will get bigger and eventually you either revert back to monetarism and pay down your debt or you default on it by not paying/printing money, the latter latter choice leading to hyperinflation, while the latter former choice means you're reverting back to Monetarism because no one is going to lend you money anymore. But remember, the purpose of Keynesian approach was to smooth out booms and busts in the economy, yet what we're seeing is making them lasting longer and falling harder. During a boom, I think the mentality of politicians goes something like "We have money to spend on buying votes but instead, we are saving it? Insanity!?" When you're forced to spend lots of money for the sake of spending money, the money is likely to be inefficiently allocated, investing in stuff that leads to more spending (like $900 handouts to each citizen) rather than investing in stuff that increases production in the long run (like building a fast railway network between cities, which require years of planning). Monetarists would balance the budget and make careful measured investments in the economy. Yes there will be boom and busts but even in recessions the economy is still fundamentally sound, and thus will be sure to recover. See Germany for example.
- nl 15y ago
  Don't blame Keynesian economics for the failings of the US politicians, specifically GW Bush. Other developed countries (Canada[1], Australia[2]) followed Keynesian economics and had budget surpluses during period leading up to 2008. The US, OTOH had expanding deficits. It is time people stopped blaming "the system", and assigned the blame where it should lay. It is the fault of one administration, and one administration only that the US economy is in the state that it is. This isn't about progressive vs conservative politics either: Australia & the US both had conservative leaders in this time period, while Canada had a (center left) Liberal government. Only one country ran deficits. [1] http://www.canadahistory.com/sections/eras/moderncanada/budget_surplus.htm http://www.canadahistory.com/sections/eras/moderncanada/budg... [2] http://www.budget.gov.au/2007-08/ http://www.budget.gov.au/2007-08/

tomjen3 15y ago

Because the US has to pay interest on the loans. And because while you and I have no problem with the idea of saving for retirement, saving and buying that car in a few years, creating a college fund for the children before they are even born, etc, the US is run by politicians and politicians don't give the rear-end of that prostitute they are fucking about what happens after the next election. So they will spend the money on frevious things.

scarmig 15y ago
What do you specifically even mean for the United States as a society to "save" money? Getting dollar bills and stuffing them into a vault? Are you saying that in an ideal world without feckless politicians, the government should tax more than it disburses, build up a pile of money, and then pay out extra money? The further you draw the analogy out, the more ridiculous the idea of equating government finances with household finances become. It's just folk economics. And that's ideology-neutral: you can be a Keynesian, monetarist, goldbug, whatever and still should reject that position.
- Symmetry 15y ago
  Generally speaking, when a country saves it takes money and invests it in things that will make more money, like factories or research. The reason that China is growing so fast right now is that it has a very high savings rate. On the other hand, there are less obvious good places to invest money in a developed economy.
  - nhaehnle 15y ago
    No, that is a misunderstanding. What gp was talking about was a government surplus, which means government spending (investment + consumption + social) is smaller than government revenue (taxation). So in fact, with the kind of government surpluses that some (horribly misled) people are demanding, money will be sucked out of the private sector which will ultimately lead to less economic activity than otherwise. There is no sense in which the government can save money like you and I, because the government is the currency issuer. It has an infinite stockpile of potential money anyway, adding to that stockpile is entirely useless.
pessimizer 15y ago
Currently, that interest rate is negative.

meric 15y ago

I didn't say Keynesian would cause economy to collapse. I am just saying it does not achieve its goal of smoothing out boom and busts because it requires too much competence from the governors of the economy Keynesian is saving money during booms and spending money during recessions. Yet during booms the money saved is too little and during recessions the money spent is too much. The debt will get bigger and eventually you either revert back to monetarism and pay down your debt or you default on it by not paying/printing money, the latter latter choice leading to hyperinflation, while the latter former choice means you're reverting back to Monetarism because no one is going to lend you money anymore. But remember, the purpose of Keynesian approach was to smooth out booms and busts in the economy, yet what we're seeing is making them lasting longer and falling harder. During a boom, I think the mentality of politicians goes something like "We have money to spend on buying votes but instead, we are saving it? Insanity!?" When you're forced to spend lots of money for the sake of spending money, the money is likely to be inefficiently allocated, investing in stuff that leads to more spending (like $900 handouts to each citizen) rather than investing in stuff that increases production in the long run (like building a fast railway network between cities, which require years of planning). Monetarists would balance the budget and make careful measured investments in the economy. Yes there will be boom and busts but even in recessions the economy is still fundamentally sound, and thus will be sure to recover. See Germany for example.

nl 15y ago
Don't blame Keynesian economics for the failings of the US politicians, specifically GW Bush. Other developed countries (Canada[1], Australia[2]) followed Keynesian economics and had budget surpluses during period leading up to 2008. The US, OTOH had expanding deficits. It is time people stopped blaming "the system", and assigned the blame where it should lay. It is the fault of one administration, and one administration only that the US economy is in the state that it is. This isn't about progressive vs conservative politics either: Australia & the US both had conservative leaders in this time period, while Canada had a (center left) Liberal government. Only one country ran deficits. [1] http://www.canadahistory.com/sections/eras/moderncanada/budget_surplus.htm http://www.canadahistory.com/sections/eras/moderncanada/budg... [2] http://www.budget.gov.au/2007-08/ http://www.budget.gov.au/2007-08/