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Old January 8th, 2013, 02:26 PM   #35 (permalink)
ElasticNinja
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Originally Posted by Speed Daemon View Post
It's easy to criticize as an outsider
Certainly.

Quote:
Originally Posted by Speed Daemon View Post
It's easy to criticize as an outsider, and be misled by phony "issues" that don't matter nearly as much as preventing the US from falling into a deep economic depression.
That is true, and I agree that economic stimulus is important. However it is important to plan how to finance such a stimulus, and some of that stimulus needs be introduced right away, via taxation that does not have sharp negative fiscal multipliers.

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Originally Posted by Speed Daemon View Post
The truth is that the US government almost always operates runs a deficit. It's no big deal, and even less important right now, with interest rates in negative numbers.
Almost every government does indeed run a deficit. However deficits of around 8% are not sustainable. Certainly not with low inflation and a developed economy. Deficits should be kept below 3% at the very least. Its good housekeeping. If one wants to spend, taxation should be increased. Spending should not be willy-nilly. It should have socioeconomic benefits.

I'm not saying that the US government should not borrow heavily right now. If it was running a surplus it should borrow right now. What I am saying is that there needs to be a plan to converge outgoings and incomes, a plan to restructure the economy.

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Originally Posted by Speed Daemon View Post
The last time the US federal budget was balanced was three years during Bill Clinton's Presidency. Why was there no hue and cry when the Bush administration was racking up massive deficits?
I don't know why so many countries have been so lax on such things. I think it was to do with the lack of realisation that the post-WWII boom is over. 5%+ growth rates are over.

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Originally Posted by Speed Daemon View Post
The fact of the matter is that there are numerous economic plans floating around. The credulity of the plans matters far less than the efficacy of each. We need a plan that actually works!
I agree, and thats what I am saying.

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Originally Posted by Speed Daemon View Post
President Obama's stimulus plan (which is based on FDR's plan to raise the US out of the Great Depression) worked. It worked once, and can work again. That's all that matters.
Certainly deficit spending is important during a downturn, to make up for wasted output potential, and to keep driving up output potential. Basic Keynesian. The current stimulus is quite different to FDR's (the success of which is debatable, I would be inclined to think of it as a qualified success), and it must be remembered that FDR actually kept the debt to GDP ratio steady!
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