The United States needs to increase its budget deficit!

[United States of Capital]

I would not say that big inflation will come soon, Velocity is falling and Inflation is the least of my worries. But my post was about you saying this

(Image)

Could you elaborate on what exactly your graph proves?

I was just adding that the collapsing velocity prevents any major inflation for a while.

A common misunderstanding is that taxes pay for government spending.

Taxes paying for government spending is not a common misunderstanding, but how the government pays for most of its spending.

[Post-Keynesian Economics]

No, their economy is so strong for many different factors, but basic economic theory indicates that saving through a boom and spending through a bust is going to net the most favorable results.

I think country should never spend more money than they have. That's where all problems begin when they have budget deficit and must borrow huge amounts of money. At least Europeans have figured this out, hopefully USA will follow the example.

I hope you can please elaborate with facts and empirical examples.

[Post-Keynesian Economics]

Could you elaborate on what exactly your graph proves?

I was just adding that the collapsing velocity prevents any major inflation for a while. But that taxes paying for government spending is not a common misunderstanding, but how the government pays for most of its spending.

A common misunderstanding is that taxes pay for government spending.

Taxes paying for government spending is not a common misunderstanding, but how the government pays for most of its spending.

There's a difference between paying for something and offsetting something. Taxes offset spending, but the money taken in from taxes is not then transferred over to various executive departments to be spent.

[Dorhagen (Ancient)]

I think country should never spend more money than they have. That's where all problems begin when they have budget deficit and must borrow huge amounts of money. At least Europeans have figured this out, hopefully USA will follow the example.

I hope you can please elaborate with facts and empirical examples.

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

[United States of Capital]

I was just adding that the collapsing velocity prevents any major inflation for a while. But that taxes paying for government spending is not a common misunderstanding, but how the government pays for most of its spending. Taxes paying for government spending is not a common misunderstanding, but how the government pays for most of its spending.

There's a difference between paying for something and offsetting something. Taxes offset spending, but the money taken in from taxes is not then transferred over to various executive departments to be spent.

Just because they do not literally transport the money with trucks to the departments does not mean taxes do not pay for spending.

[The Emerald Dawn]

I hope you can please elaborate with facts and empirical examples.

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

It'd be easier to say "I don't understand macroeconomics".

[United States of Capital]

I hope you can please elaborate with facts and empirical examples.

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

If the countries give their citizens tax cuts and/or pay unemployed people to dig ditches so they can all buy a new TV it would give the TV industry a boost and grow the economy.

[Yue-Laou]

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

It'd be easier to say "I don't understand macroeconomics".

Or micro. Or basic finance.

[Dorhagen (Ancient)]

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

It'd be easier to say "I don't understand macroeconomics".

I've read few books about economics but I think it just good to live within your means. There is no need to make it so complicated. Fiscal conservatism is what works the best.

[The Emerald Dawn]

It'd be easier to say "I don't understand macroeconomics".

I've read few books about economics but I think it just good to live within your means. There is no need to make it so complicated. Fiscal conservatism is what works the best.

...Seriously, if national economics aren't complicated, you're not even remotely close to being successful. If GLOBAL economics aren't complicated, we're all fucked.

Reading a few books != understanding macroeconomics.

[Dorhagen (Ancient)]

I've read few books about economics but I think it just good to live within your means. There is no need to make it so complicated. Fiscal conservatism is what works the best.

...Seriously, if national economics aren't complicated, you're not even remotely close to being successful. If GLOBAL economics aren't complicated, we're all fucked.

Reading a few books != understanding macroeconomics.

I know. But what's wrong with not spending more money than you have. Estonia has only 10% of debt, which decreased last year from 10.1% to 10.0%. Also debt of Germany decreased.

[The Emerald Dawn]

...Seriously, if national economics aren't complicated, you're not even remotely close to being successful. If GLOBAL economics aren't complicated, we're all fucked.

Reading a few books != understanding macroeconomics.

I know. But what's wrong with not spending more money than you have. Estonia has only 10% of debt, which decreased last year from 10.1% to 10.0%. Also debt of Germany decreased.

Because you need to spend money to make money. You can't increase your revenue without investment, and you can't invest if you don't spend money.

Simply put: Every dollar you spend, is gained by someone. They are taxed on that dollar spent, and you gain the revenue back. If you spend on things your nation benefits from, you not only gain the service, but the taxation. Then, if they spend that dollar within the nation, someone else gains the dollar, the spender gains a service, and you get more taxes.

As that dollar passes from hand to hand, you can gain 300% of the value of that one dollar, just in taxation.

[Magna Libero]

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

If the countries give their citizens tax cuts and/or pay unemployed people to dig ditches so they can all buy a new TV it would give the TV industry a boost and grow the economy.

What would a country do with all the shovel-jobs? What on earth is a country going to do with tons of holes in the earth? Prepare for trench warfare?

[The Emerald Dawn]

If the countries give their citizens tax cuts and/or pay unemployed people to dig ditches so they can all buy a new TV it would give the TV industry a boost and grow the economy.

What would a country do with all the shovel-jobs? What on earth is a country going to do with tons of holes in the earth? Prepare for trench warfare?

Are you familiar with indoor plumbing?

Electricity?

Internet?

[Magna Libero]

Yes, I'm sure that the lenders and bankers are happy with all the interest rates paid. The question is does the government like it? Does the tax payer like the ever increasing government debt? Are you suggesting that no debt shall be paid back -- only the interest rates?

(I'm not familiar with the contract rules of let's say USA's loans.) Now, $16 trillion is quite a big chunk of the US GDP. Add a small interest rate to that amount every year. The final result is government expenditures consists of mostly the payment of the Interest rates.
How is the US going to pay for that much? I mean like ever?

You're forgetting that the GDP grows every year too. Does the debt increase every year? Yes. Does the debt to GDP ratio increase every year? Not necessarily (see the graph in my flag). And our debt to GDP ratio would have to increase A LOT for our interest payments to make up too much of our budget.

What does your graph say? Accumulated debt at lowest about 30%. Sounds very high.

Hmm. I don't think it is very wise to rely on constant economic growth. You forget the possibility of a recession or depression. The amount of debt seems to be a giant bomb (or bubble). When it finally explodes it will create a vicious circle -- If the economic growth also goes on the negative Side and debt is ever increasing.
Also, doesn't the interest rate on the loans increase the more a country borrows, since few are willing to lend to this country?

Also, I think the word GDP should be rejected. It does not tell if a country is spending on guns, pyramids, giant statues, empty apartments etc. On the other hand GDP can also indicate the productive production of cheese, clothing, ROLEX's etc.

[Magna Libero]

What would a country do with all the shovel-jobs? What on earth is a country going to do with tons of holes in the earth? Prepare for trench warfare?

Are you familiar with indoor plumbing?

Electricity?

Internet?

Right.

"Unemployed people". Somehow this doesn't sound very effective. I don't think they are competitive enough for doing those jobs.

[The Emerald Dawn]

Are you familiar with indoor plumbing?

Electricity?

Internet?

Right.

"Unemployed people". Somehow this doesn't sound very effective. I don't think they are competitive enough for doing those jobs.

If you employ all of the unemployed in positions assisting with rebuilding the infrastructure of the nation, do you know what happens to the nation?

[Freiheit Reich]

Isn't it logical. I'm not going to buy a new TV when I don't have money for it. But somewhy countries are "buying new TVs" when they can't afford them.

It'd be easier to say "I don't understand macroeconomics".

Actually his post makes perfect sense. In a household we worry about buying a TV or going to Six Flags for a fun diversion. In a nation, we worry about buying several military jets. The numbers are bigger but the concept is the same. Don't spend over your budget, especially for luxury goods or fun diversions like statues or unnecessary wars in Middle Eastern nations that didn't attack us.

Taxes can be raised but this only encourages more spending instead of going towards paying off the debt so that taxes can be lowered once its paid off. The USA needs to cut spending to the bone and use the excess tax revenues to pay off the debt. Once the debt is paid off then a strict budget needs to be maintained. We can start by pulling out all foreign military bases and reducing the military force by 50% and cutting welfare 50% as well.

Andrew Mellon had a good plan to reduce taxes while also reducing the deficit. His plan worked brilliantly. The tax cuts and spending cuts were implemented gradually (this is better than sharp decreases).

http://en.wikipedia.org/wiki/Andrew_W._ ... ite_note-8

As you can see, the debt dropped, despite lower taxes. However, tax cuts are only possible with spending cuts. Bush was too stupid to understand this.

http://www.usgovernmentdebt.us/spending ... 011mcn_H0f

[Post-Keynesian Economics]

You're forgetting that the GDP grows every year too. Does the debt increase every year? Yes. Does the debt to GDP ratio increase every year? Not necessarily (see the graph in my flag). And our debt to GDP ratio would have to increase A LOT for our interest payments to make up too much of our budget.

What does your graph say? Accumulated debt at lowest about 30%. Sounds very high.

Hmm. I don't think it is very wise to rely on constant economic growth. You forget the possibility of a recession or depression. The amount of debt seems to be a giant bomb (or bubble). When it finally explodes it will create a vicious circle -- If the economic growth also goes on the negative Side and debt is ever increasing.
Also, doesn't the interest rate on the loans increase the more a country borrows, since few are willing to lend to this country?

Also, I think the word GDP should be rejected. It does not tell if a country is spending on guns, pyramids, giant statues, empty apartments etc. On the other hand GDP can also indicate the productive production of cheese, clothing, ROLEX's etc.

If you actually think 30% of GDP is a "very high" debt, then that's an issue in itself.

I'm not relying on constant economic growth, I'm relying on long term economic growth. And if you could please give me an example of when a country had its "debt bubble explode" while it still had control of its currency and wasn't being militarily forced to make insane payments, then I'd like that.

Also, no, interest rates on loans don't increase the more a country borrows unless the investor has reason to believe that they won't get their yearly interest payments. For investors to even remotely be worried about that, we would have to have interest payments a hell of a lot larger than 6% of our budget.

And just in case inflation comes up as an issue again, it is worth noting that the weighted average inflation of our trading partners (not including Venezuela because it is a high outlier) is over 2.2%. Our current inflation is 1.2%.

[The Republic of Llamas]

FINALLY! SOMEONE WHO UNDERSTANDS THAT DEFICITS ARE NOT INHERENTLY EVIL! *High Fives*

[Post-Keynesian Economics]

It'd be easier to say "I don't understand macroeconomics".

Actually his post makes perfect sense. In a household we worry about buying a TV or going to Six Flags for a fun diversion. In a nation, we worry about buying several military jets. The numbers are bigger but the concept is the same. Don't spend over your budget, especially for luxury goods or fun diversions like statues or unnecessary wars in Middle Eastern nations that didn't attack us.

Taxes can be raised but this only encourages more spending instead of going towards paying off the debt so that taxes can be lowered once its paid off. The USA needs to cut spending to the bone and use the excess tax revenues to pay off the debt. Once the debt is paid off then a strict budget needs to be maintained. We can start by pulling out all foreign military bases and reducing the military force by 50% and cutting welfare 50% as well.

Andrew Mellon had a good plan to reduce taxes while also reducing the deficit. His plan worked brilliantly. The tax cuts and spending cuts were implemented gradually (this is better than sharp decreases).

http://en.wikipedia.org/wiki/Andrew_W._ ... ite_note-8

As you can see, the debt dropped, despite lower taxes. However, tax cuts are only possible with spending cuts. Bush was too stupid to understand this.

http://www.usgovernmentdebt.us/spending ... 011mcn_H0f

Paying off our debt completely would be horrific. You do understand how government bonds work, yes? The end of the national debt would mean the end of government bonds, the removal of one of the safest investments in world markets. The world economy would suffer dramatically. In addition, things like Social Security depend on government bonds. All of Social Security would have to be put into private stocks, which sounds nice unless a business goes down and all of a sudden there goes grandma into poverty.

Another thing - part of the reason that we have a large national debt (and it's a very different reason for a country like Greece) is that we ARE such a great investment. A greater deficit specifically means that we are putting a larger overall chunk of money into the private sector, rather than letting more sit in the public sector. When the private sector has more money at the expense of the private sector, it means that overall many families have a better standard of living and there is more money out there. We could not afford to maintain even the current imperfect standards of living without the money we spend every year.

Finally, there's simply no good reason to pay off the national debt. It doesn't give us any economic security. We paid off our debt once, in 1835 under Andrew Jackson. A couple years later, we entered the worst depression of our history.

The creation of the national debt was not an accident.

[United States of Capital]

If the countries give their citizens tax cuts and/or pay unemployed people to dig ditches so they can all buy a new TV it would give the TV industry a boost and grow the economy.

What would a country do with all the shovel-jobs? What on earth is a country going to do with tons of holes in the earth? Prepare for trench warfare?

The money they get would get spent so businesses respond to the increased demand by hiring workers and give the shovel workers real jobs.

[Magna Libero]

Right.

"Unemployed people". Somehow this doesn't sound very effective. I don't think they are competitive enough for doing those jobs.

If you employ all of the unemployed in positions assisting with rebuilding the infrastructure of the nation, do you know what happens to the nation?

Depends on if the workers know what they are supposed to do.

[United States of Yankeeland]

Decrease the budget deficit, I know that it will hurt the economy but the debt to gdp percentage is to big, cut 450 or 500 billion dollars and I will be happy.

[United States of White America]

Who cares? America is fine, better than ever.