Re: Budget deficits and GDP

On Fri, 30 Nov 2007 08:44:42 -0800, Ron Peterson wrote:

On Nov 28, 12:32 am, The Trucker <mik...@xxxxxxxxxxx> wrote:
On Mon, 26 Nov 2007 20:18:01 -0800, dekka wrote:

Could someone with an economics degree explain to me academically how
a budget deficit hurts the economy(especially GDP)? I've taken a few
international economics courses, so
feel free to get technical.

Any explanation you get from someone with an economics degree will
probably be dead wrong. And if you get it from a monetary economist it
will probably be even more wrong. I will only say that the _AMOUNT_
of the deficit is a major concern and WHY there is a deficit. Where "why"
is _WHO_ didn't pay the taxes, and to what was the excess spending
applied.

Good reply, but I don't see why an economics degree would cause a
person to be wrong.

Because very few of the universities teach economic history and differing
theories of value and such. The (admittedly very few) econ texts that I
have seen have been extremely dictatorial, dogmatic, and repetitious.
Like learning to read using those little cards with words on them and no
phonics. No thinking allowed.

A government deficit is just transferring assets from one group of
citizens to another. Wasteful spending, on the other hand, destroys
assets.

Well... I observed in the 80's that the people who were unemployed by the
Volcker recession were not in a good position to be buying all those very
high yield bonds. But the cats that got the tax breaks (that would be
the rich folks) were sucking them up left and right. So, yeah... It was a
asset transfer. Cutting taxes for the rich and creating deficits just
transfers assets from the middle class to the very wealthy. If the middle
class have no income then there will be no demand and no reason to invest.
And if the tax on interest from T-bills is taxed at a low rate (not the
70% that it would have been taxed at before Reagan) then why take chances
on investing? Just let the government send money.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend

.

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