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Going into debt at all is bad? Since when has that ever been basic economics? The stimulus package is about infrastructure. If the resulting payoff is greater

by walterk 18y ago

Going into debt at all is bad? Since when has that ever been basic economics? The stimulus package is about infrastructure. If the resulting payoff is greater than the debt, then absolutely it makes sense to go into debt. That's basic economics, and it has been for as long as the concept of debt has existed.

jamiequint 18y ago
The point of the spending isn't because infrastructure has a positive ROI its to artificially create jobs to cushion the people suffering from the current economic collapse. Also, traditionally investment is repaid as a result of the investment activity, where in the US it seems to be repaid from increased borrowing. How long can that go on before it stops working?
- walterk 18y ago
  "The point of the spending isn't because infrastructure has a positive ROI its to artificially create jobs to cushion the people suffering from the current economic collapse." The reason why we're spending is to cushion ourselves from the economic collapse, yes. The reason why we're spending on infrastructure is because this is the only way to do it that isn't ultimately a waste, and we would have needed to do it at some point regardless of the state of the economy. No better time than an economic collapse to do so. (This assumes that the infrastructure plans themselves are wise, of course. So far, they appear to be.) Saying that investment in the US is traditionally "repaid from increased borrowing" has nothing to do with the rationality of spending on infrastructure (which eventually pays for itself by increasing GDP). A lack of responsible accounting and accountability causes US debt to be repaid with increased borrowing, not what the borrowed funds are spent on.
mhartl 18y ago
I omitted detail for brevity. Of course debt isn't always bad. But "too much" debt is. How much is "too much"? That's complicated. So I simplified. That being said, going into (mainly credit card) debt to buy TVs and iPods and widgets, which lots of people having been doing for years, is almost always "too much". If the resulting payoff is greater than the debt, then absolutely it makes sense to go into debt. I agree: if. But government lacks the proper incentives to ensure that the benefits justify the costs.

by walterk 18y ago

jamiequint 18y ago

The point of the spending isn't because infrastructure has a positive ROI its to artificially create jobs to cushion the people suffering from the current economic collapse. Also, traditionally investment is repaid as a result of the investment activity, where in the US it seems to be repaid from increased borrowing. How long can that go on before it stops working?

walterk 18y ago
"The point of the spending isn't because infrastructure has a positive ROI its to artificially create jobs to cushion the people suffering from the current economic collapse." The reason why we're spending is to cushion ourselves from the economic collapse, yes. The reason why we're spending on infrastructure is because this is the only way to do it that isn't ultimately a waste, and we would have needed to do it at some point regardless of the state of the economy. No better time than an economic collapse to do so. (This assumes that the infrastructure plans themselves are wise, of course. So far, they appear to be.) Saying that investment in the US is traditionally "repaid from increased borrowing" has nothing to do with the rationality of spending on infrastructure (which eventually pays for itself by increasing GDP). A lack of responsible accounting and accountability causes US debt to be repaid with increased borrowing, not what the borrowed funds are spent on.

mhartl 18y ago

I omitted detail for brevity. Of course debt isn't always bad. But "too much" debt is. How much is "too much"? That's complicated. So I simplified. That being said, going into (mainly credit card) debt to buy TVs and iPods and widgets, which lots of people having been doing for years, is almost always "too much". If the resulting payoff is greater than the debt, then absolutely it makes sense to go into debt. I agree: if. But government lacks the proper incentives to ensure that the benefits justify the costs.