Please explain the multiplier effect and make your argument in this thread: Tax cuts don't make basic economic sense That way I can refute it. Otherwise I can't argue with vague terminology.
Looks like the real debt might be a lot more: If he's right, there's no way the U.S. is going to be able to pay this all and it's already too late. Best case scenario, there's going to be a huge recession and government employees are going to lose 40% of their retirement, while there will probably also be a huge cut in Social Security for old people. We saw the effect old people losing their retirement savings can have during the last recession, having to stay in the workforce longer and creating a bottleneck effect preventing recent college grads from getting a foothold on the career ladder.
You're the one that brought up the multiplier, not me. Referring to a "fanciful little magical world" when referring to a mathematical concept really isn't cunning. It is after all, merely represented by 1/mps (informing us of the importance of the marginal propensity to consume)
A balanced budget should be a goal. Therefore there should never be much debt or surplus unless there is an emergency or other need for investment. But a balanced budget as a goal does make sense. The federal government is not supposed to have accumulated surpluses (savings account) because there is no mechanism to store the surplus and it's an indication the government is taking too much in taxation...
There is no economic sense in a 'balanced budget'; you're merely making an ideological position. There are, for example, always infrastructure investments which will lead to an overall increase in well-being. There is only a rationale to eliminate stimulus if macroeconomic overheating becomes pertinent.
Yes, but how rarely the government ever borrows money to pay for something that will actually ever have greater economic returns than the purchase cost. Politicians love to call every expenditure of money "investment". Don't get me wrong, I believe there are theoretically areas where public sector money could be spent that would bring returns far greater than in the private sector. But is government able to identify what these areas actually are? And if government has been so great at investment in the past, why are they now in so much debt? That's a very big argument right there.
I'm not interested in anti-government grunt. Of course government failure exists, but that actually tends to be very specific: e.g. underinvestment into public goods, given the impact of the electoral cycle.
So you believe there is 'economic sense' in constant surplus or deficit budgets? You think what we have in the USA today of constant annual $500+ billion deficits is 'economic sense'? Especially when none of the money is spent on emergency or infrastructure? A balanced budget is a great goal. Trump today wants to overheat the economy, no matter the risks, because it's the way he thinks he achieves a win. The second the Fed takes some action to cool the economy Trump will tar and feather them publicly...and Trump's flock will follow lockstep...
As I said, the only solid rationale for a surplus is the need to avoid.overheating. The problem is that you're still corrupted by the "just like an individual's overdraft" false narrative. There are clear macro problems with the US. For example, historically it has been overreliant on ineffective Military Keynesianism that inflame crowding out costs which threaten long term growth. Trump doesn't really want to do anything. He merely needs to blag a message that he thinks Joe Pleb will buy. Now it is true that he should be much more radical. Inequalities and structural flaws abound in the US economy. But none of that then justifies a surplus and pandering to austerity guff.
But you do agree that at SOME point there should be a surplus, and that it would be better if the country was not in debt, don't you?
I've already referred to the criteria for a surplus: avoiding overheating problems. Your question over whether a surplus is better is actually the wrong question. It should be "would it be better if government expenditure was not needed?". I'd answer "yes" to that. However, that's not going to happen (given capitalism's tendency to crisis and assorted market failures impacting on investment)
Again...the US has no mechanism to store cash...cannot have a surplus as long as there is debt to pay. If the US had no debt and there is a surplus there remains no policy for storing cash. I'm not corrupted? The US does not have a policy or mechanism to store cash. Any surplus, which probably will not happen in my lifetime, will be used to pay debt. All expenditures in the US for the foreseeable future will be funded with at least 30% debt money. Debt money is now SOP. Trump is a joke which means the Republicans in Congress and Trump's base who support his nonsense are also a joke. I guess right now the USA is sort of a joke...
Reiver, just using the vague terminology "macro" is not really an argument. Or at least an extremely flimsy one at best. You might care to explain a little bit into exactly how borrowing money to pump it into the economy would, in your personal opinion, create more wealth than the cost of borrowing. (And not just the cost of borrowing, but there's also added risk that has to be accounted for) You know the way I say it, isn't borrowing all this money for from your own population diverting it away from other productive private sector investment?
Given its one of the main field of study in economics, it was a bit obvious. I've already broken it down to very simple terms: growth is created, such that the pie is bigger and the debt less important. You would have to show how crowding-out effects are complete (and dispute the evidence, plus the failure of austerity which actually increased debt by reducing growth). The problem is that you haven't bothered with any relevant macro. There's plenty of analysis to choose from. Take the Marxists. They have multiple sub-schools, but one refers to the failure of private investment (due to market concentration) and therefore the need for 'government waste' to stabilise the economy.
But you haven't shown how or why growth would be created. It seems to me, growth wouldn't really be greater than the amount of deficit spending, and the amount of growth would be counterbalanced by a reversal of growth from having to pay off that debt later. In other words, you're not really getting something for nothing.
But didn't it really become a joke when it adopted neoliberalism (including austerity and unchallenged Dickensian inequalities)? Seems a tad more important than the Stormy fuss from Trump's fluff.
You want me to give you a lesson in Macro 101? Read some Keynes. We know that market failures impair investment. We also know that the business cycle creates hysteresis in unemployment (destroying human capital). And your position? You refer to the multiplier effect, a mathematical relationship that shows the basic nature of stimuli, as mythical. You then compare the government to Auntie Mildred's decision over whether to max pit her credit cards to buy a new kitchen. Your 'but any positive effects are eliminated through future payback ' is cobblers. The pie is bigger and therefore the debt less important. Why do you think right wingers focused on crowding out? They were attempting to suggest stimulus doesn't work as the net injection is zero. The empirical evidence of course rejects that position.
The USA has not 'adopted' anything...we're not that smart and/or calculated. We live for the moment and just about everything we do is rooted in Band-aid solutions...nothing done for the long term best interest of the USA. You can try to pigeon-hole the USA but it's meaningless. The USA is what it is based on no grand plans and living for the moment...
Reaganomics was Military Keynesianism, but it shifted the consensus to market fundamentalism. You haven't come out of that insanity.
Be a damn good citizen and support a capitalist today, go into debt, it will help your nation and it's 1%...
It was more than that. While it lacked the economic radicalism of Thatcherism, it shifted the consensus. By presenting a seemingly unchallengeable narrative, it enabled neo-liberalism to become the dominant discourse.
