The United States needs to increase its budget deficit!

[Post-Keynesian Economics]

What is good about a surplus? Most of our surpluses are followed by economic depressions.

Reserves are good, we hopefully have some money saved so when we have a recession we can spend on infrastructure projects without building up debt - saying this I'm no economist.

The only thing about that is, building up debt isn't a bad thing. We paid off our debt completely in 1835 and a year later we were swept into our worst depression in history.

[The TransPecos]

This concept works only because the US Dollar is essentially the world's reserve currency. There are signs that several major Dollar holders are slowly moving to end that status. Once that happens the classic problems with excessive debt will hit the USA. It's really only a matter of time...

[Frisivisia]

US debt and US deficits are what the world economy is based off of. They're good and essential to the world economy.

[Greed and Death]

Instead of cutting taxes, rather shift them, upwards, so that the rich and privileged finally start paying for their privileges.

They already do privileges are not free golden toilets cost money.

[Post-Keynesian Economics]

This concept works only because the US Dollar is essentially the world's reserve currency. There are signs that several major Dollar holders are slowly moving to end that status. Once that happens the classic problems with excessive debt will hit the USA. It's really only a matter of time...

Why does the concept only work when the US is the world's reserve currency? Even if we weren't, we're still in control of the supply of US dollars. So if inflation or interest rates ever become an issue, then we can take necessary measures. But that isn't happening and won't happen until we are at virtual full employment (4% unemployment).

[Arcadonisia]

No the US doesn't want an increased deficit. Surpluses are great but this is almost impossible to achieve so I would happily have year by year having a slight deficit or if your lucky a slight surplus.

What is good about a surplus? Most of our surpluses are followed by economic depressions.

What else do you expect to happen? It's not realistic at all for an economy to keep growing steadily without the risk of recession or depression. The economy goes into recessions/depressions because it cannot cope with the unsustainable growth during economic boom periods. Therefore, the economy deflates during a natural process to correct itself.

Besides, I like to think of our current economic ideals (grow, grow, grow! Screw the natural boom/bust cycles) are just copying the ideals of a cancer cell, to keep growing regardless of the consequences.

[Post-Keynesian Economics]

What is good about a surplus? Most of our surpluses are followed by economic depressions.

What else do you expect to happen? It's not realistic at all for an economy to keep growing steadily without the risk of recession or depression. The economy goes into recessions/depressions because it cannot cope with the unsustainable growth during economic boom periods. Therefore, the economy deflates during a natural process to correct itself.

Besides, I like to think of our current economic ideals (grow, grow, grow! Screw the natural boom/bust cycles) are just copying the ideals of a cancer cell, to keep growing regardless of the consequences.

But a surplus does not equal economic growth. A surplus in government equals a deficit in the private sector. It is simple accounting.

[Arcadonisia]

What else do you expect to happen? It's not realistic at all for an economy to keep growing steadily without the risk of recession or depression. The economy goes into recessions/depressions because it cannot cope with the unsustainable growth during economic boom periods. Therefore, the economy deflates during a natural process to correct itself.

Besides, I like to think of our current economic ideals (grow, grow, grow! Screw the natural boom/bust cycles) are just copying the ideals of a cancer cell, to keep growing regardless of the consequences.

But a surplus does not equal economic growth. A surplus in government equals a deficit in the private sector. It is simple accounting.

And yet having a several billion dollar deficit is a good thing? Please. The government is slowly starting to choke on the massive debt that it has rung on on useless wars.

[Geilinor]

I don't see why anyone would want a larger debt/deficit though.

Alexander Hamilton would. http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt

[Geilinor]

This concept works only because the US Dollar is essentially the world's reserve currency. There are signs that several major Dollar holders are slowly moving to end that status. Once that happens the classic problems with excessive debt will hit the USA. It's really only a matter of time...

Then we'd attract domestic investors to buy bonds. That's essentially how Japan is staving off economic collapse. It certainly wouldn't be ideal, but we wouldn't be ruined immediately.

[Greed and Death]

Deficit should likely be increased. However, arguing over is a useful too to gain extra concessions in other areas.

[Atlantic County]

No, no, we shouldn't. It makes absolutely no sense to keep printing money and owing it to ourselves. It's just absurd.

[Post-Keynesian Economics]

But a surplus does not equal economic growth. A surplus in government equals a deficit in the private sector. It is simple accounting.

And yet having a several billion dollar deficit is a good thing? Please. The government is slowly starting to choke on the massive debt that it has rung on on useless wars.

How so?

[Post-Keynesian Economics]

No, no, we shouldn't. It makes absolutely no sense to keep printing money and owing it to ourselves. It's just absurd.

It makes sense because it puts more money in the private sector. We aren't at maximum GDP currently, or even a reasonable GDP given our resources.

[Mike the Progressive]

No, no, we shouldn't. It makes absolutely no sense to keep printing money and owing it to ourselves. It's just absurd.

It makes sense because it puts more money in the private sector. We aren't at maximum GDP currently, or even a reasonable GDP given our resources.

It doesn't. You're a Keynesian, correct? The theory would work if taxes were raised and public spending was cut in times of economic prosperity, but they aren't. So we keep on borrowing and spending, increasing our deficit, increasing our debt with really no long term solution to address either problem. More taxes? Sure, until we have another recession, then we have to cut them. Less public spending? Sounds great until we are suckered into another war or some ridiculous public project (let's somehow rebuild all of America's infrastructure/let's adopt a NHS like program that will cost trillions). Eventually, we'll repeat this process until we reach a point where we can no longer borrow and will default.

[Post-Keynesian Economics]

It makes sense because it puts more money in the private sector. We aren't at maximum GDP currently, or even a reasonable GDP given our resources.

It doesn't. You're a Keynesian, correct? The theory would work if taxes were raised and public spending was cut in times of economic prosperity, but they aren't. So we keep on borrowing and spending, increasing our deficit, increasing our debt with really no long term solution to address either problem. More taxes? Sure, until we have another recession, then we have to cut them. Less public spending? Sounds great until we are suckered into another war or some ridiculous public project (let's somehow rebuild all of America's infrastructure/let's adopt a NHS like program that will cost trillions). Eventually, we'll repeat this process until we reach a point where we can no longer borrow and will default.

I'm a Post-Keynesian, and there are some "Key" differences between those two schools of thought. But to respond to your points:

Taxes should be raised and public spending should be cut only when inflation starts to increase either at a dangerous rate or to dangerous levels. Right now, inflation isn't budging. If it isn't budging there's literally no reason for us to not spend more money.

The biggest flaw in your logic is your final sentence.

"Eventually, we'll repeat this process until we reach a point where we can no longer borrow and will default."

First of all, the US cannot default on the US dollar. We have complete control over that. Greece can default because its currency is the Euro, and so they have to beg for exchange via exports. But we can't default. It is impossible.

Second of all, even if we could, when do we reach this "point?"

Is it when debt is 112% of GDP? We've already been there during World War II.

What about 225% of GDP? Well, Japan's there and they have a lot less security than us.

But the truth is, there is very little chance that our debt will get to that point. Because even though we see debt as something constantly increasing, it really isn't. We regularly have monthly surpluses in this country and nobody even notices. As a percentage of GDP, our debt sometimes is up and sometimes is down. See my flag for instance.

[Freiheit Reich]

we need to get rid of the debt ceiling, and if Congress budgets more than we make in taxes, it implicitly approves of the borrowing needed to meet the budget.

but generally, debt is completely irrelevant, the promise of paying back that money is just as good as actually paying it back. stability is what gives our currency value.

I would go a step farther. First of all, there is little wrong with borrowing money. Second of all, the other option is to simply print more money. Seeing as we don't have enough currency circulating in the country right now, we should definitely be printing more money.

Sure, worked well for Germany after WW1 right? Bonus for Germany is that the excellent post WW1 economy (thanks to all that printed German money) caused a political change in which Germany got a powerful leader that turned them from weakened war loser to a powerhouse in a few short years.

Zimbabwe did the same thing as well in recent years and that is why they are one of Africa's top economies.

[Ashmoria]

you are so right

we need to increase spending and increase jobs.

i dont have strong enough words to say how wrong it is that we have abandoned the 20-somethings to fiscal disaster. how are they going to succeed in the world if they cant get a job for a freaking decade. it is horrible that the congressional republicans will do nothing to help fix this situation.

The Democrats were little better as they couldn't strong arm the GOP enough either. Both parties are funded by the corporate swine. As long as that's the case, I don't expect much to change unless one is to end Citizen's United.

i dont know what you think the democrats could have done. you cant force the other party to cooperate. all you can do is appeal to their duty to the country and that fell on deaf ears.

[Downeistan]

I would go a step farther. First of all, there is little wrong with borrowing money. Second of all, the other option is to simply print more money. Seeing as we don't have enough currency circulating in the country right now, we should definitely be printing more money.

Sure, worked well for Germany after WW1 right? Bonus for Germany is that the excellent post WW1 economy (thanks to all that printed German money) caused a political change in which Germany got a powerful leader that turned them from weakened war loser to a powerhouse in a few short years.

Zimbabwe did the same thing as well in recent years and that is why they are one of Africa's top economies.

Nice strawman. The discussion is not about printing money ad infinitum, it is about spending up to full employment of resources, two radically different concepts. From the beginning of TARP, the stimulus, QE, et al the conservative pundits prattled on and on about the impending hyperinflation in the US; at some point I would think they would grow tired of being constantly wrong and actually investigate modern monetary policies such as those proposed by the OP.

[The TransPecos]

This concept works only because the US Dollar is essentially the world's reserve currency. There are signs that several major Dollar holders are slowly moving to end that status. Once that happens the classic problems with excessive debt will hit the USA. It's really only a matter of time...

Why does the concept only work when the US is the world's reserve currency? Even if we weren't, we're still in control of the supply of US dollars. So if inflation or interest rates ever become an issue, then we can take necessary measures. But that isn't happening and won't happen until we are at virtual full employment (4% unemployment).

As long as others are willing to purchase US government (and private) securities then the US dollar will remain reasonably, but not completely, inflation resistant and will remain the reserve currency. What happens when this no longer occurs and others begin to buy non-US securities as their reserve? The federal government can then only print money with no security to back it. There are plenty of national examples of what happens when this is done.

Discuss the situation if petroleum products, agricultural products, and basic metals were priced in a national currency other than U S dollars.

[Downeistan]

Why does the concept only work when the US is the world's reserve currency? Even if we weren't, we're still in control of the supply of US dollars. So if inflation or interest rates ever become an issue, then we can take necessary measures. But that isn't happening and won't happen until we are at virtual full employment (4% unemployment).

As long as others are willing to purchase US government (and private) securities then the US dollar will remain reasonably, but not completely, inflation resistant and will remain the reserve currency. What happens when this no longer occurs and others begin to buy non-US securities as their reserve? The federal government can then only print money with no security to back it. There are plenty of national examples of what happens when this is done.

Discuss the situation if petroleum products, agricultural products, and basic metals were priced in a national currency other than U S dollars.

So long as the US decides to pay its bills (i.e. doesn't get just completely asinine in some debt ceiling fiasco) then people will remain willing to purchase US securities. Yes, reckless spending with no concerns for full employment of resources could drive margins up -- but no one is recommending printing unchecked amounts of money, and if that is the concern then we are cutting off our nose to spite our face.
Regarding petroleum, agricultural, basic metals in another currency I don't see the issue - most of the major currencies float against one another currently, you're just selecting which one is the benchmark starting point.

[Neoconstantius]

I don't see why anyone would want a larger debt/deficit though.

Alexander Hamilton would. http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt

Did Alexander Hamilton have in mind the unfamothably large amount of debt we've accumulated to date? Not a chance. Publically held debt in the US will exceed 76% of GDP this year. $16 trillion and growing is unsustainable and will ultimately bring economic misfortune as the deficit approaches 90% of GDP, which is scheduled to occur in the next 5 to 10 years.

In many ways, it's similar to the climate issue. How long will we watch it happen and take no action to stop it? Just as we're addicted to oil, we're addicted to spending. And in both these dependencies, something's gotta give.

[Downeistan]

Alexander Hamilton would. http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt

Did Alexander Hamilton have in mind the unfamothably large amount of debt we've accumulated to date? Not a chance. Publically held debt in the US will exceed 76% of GDP this year. $16 trillion and growing is unsustainable and will ultimately bring economic misfortune as the deficit approaches 90% of GDP, which is scheduled to occur in the next 5 to 10 years.

In many ways, it's similar to the climate issue. How long will we watch it happen and take no action to stop it? Just as we're addicted to oil, we're addicted to spending. And in both these dependencies, something's gotta give.

What exactly is magic about 90%? And please feel free to explain why when we've exceeded 76% or 90% in the past calamity did not ensue.

[The TransPecos]

As long as others are willing to purchase US government (and private) securities then the US dollar will remain reasonably, but not completely, inflation resistant and will remain the reserve currency. What happens when this no longer occurs and others begin to buy non-US securities as their reserve? The federal government can then only print money with no security to back it. There are plenty of national examples of what happens when this is done.

Discuss the situation if petroleum products, agricultural products, and basic metals were priced in a national currency other than U S dollars.

So long as the US decides to pay its bills (i.e. doesn't get just completely asinine in some debt ceiling fiasco) then people will remain willing to purchase US securities. Yes, reckless spending with no concerns for full employment of resources could drive margins up -- but no one is recommending printing unchecked amounts of money, and if that is the concern then we are cutting off our nose to spite our face.
Regarding petroleum, agricultural, basic metals in another currency I don't see the issue - most of the major currencies float against one another currently, you're just selecting which one is the benchmark starting point.

Which one is the basis is critical. Priced in U S dollars, there is no exchange problem for the U S even if it prints a few too many dollars. U S, no problem. But if the TransPecos want to buy, it has to buy using U S dollars. If the TransPecos prints too many Carbonias, who is going to be willing to trade relatively good U S dollars for relatively worthless TransPecos Carbonias? TransPecos, real bad problems.

Now turn it around and you'll start to see the problem. Interest on the US federal debt is horrific and can only get worse. When China and others start saying enough is enough on federal notes and when they can find better investments elsewhere than the US, it will be time to quickly convert your holdings to Carbonias. I've got a few you might be interested in...

[Post-Keynesian Economics]

I would go a step farther. First of all, there is little wrong with borrowing money. Second of all, the other option is to simply print more money. Seeing as we don't have enough currency circulating in the country right now, we should definitely be printing more money.

Sure, worked well for Germany after WW1 right? Bonus for Germany is that the excellent post WW1 economy (thanks to all that printed German money) caused a political change in which Germany got a powerful leader that turned them from weakened war loser to a powerhouse in a few short years.

Zimbabwe did the same thing as well in recent years and that is why they are one of Africa's top economies.

For some reason, I feel that there is a slight difference between the US and Weimar Germany or Zimbabwe.

Oh yeah. There is.

Third, the most important difference between us and post-war Hungary or Weimar is that our roads haven't been razed to the ground and half the country isn't striking. It's very difficult to have hyperinflation when you still have a functioning economy. Almost all examples of hyperinflation result from huge economic shocks that devastate an economy so much that leaders think printing money is the only solution to growth. As bad as the Great Recession has been, our GDP is already back to and above its all-time pre-recession high. As bad as unemployment is, more than 80 percent of the labor force is working. In Zimbabwe, 80 percent of the population was unemployed.

http://www.theatlantic.com/business/arc ... ar/254715/