Deficit Spending- Please Explain the Logic

[pvn]

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That's just my guess, however, and I'd rather not be so pessimistic about what our politicians are doing.

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I think you're pretty close.

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Now, if the middle and lower classes actually knew this stuff well, who would they vote for (if they desired to move up), fiscal conservatives or fiscal liberals?

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what about fiscal do-nothings?

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By that, do you mean status quo? Status quo is an endorsement of deficit spending. I don't think I caught your point. I guess that the best way to put it would be this:

If middle and lower class Americans knew how to vote their best interests and didn't feel relegated to vote for only Dems or Reps, what policy would they endorse?

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By do-nothings, I mean no fiscal policy, no spending. There's really no difference between democrats and republicans, they both want to spend [censored] of money, just on slightly different things. From this perspective of the hypothetical enlightened lower and middle classes that you asked about, once they figure out what's going on it doesn't matter if someone else is spending your money on a donkey or an elephant, it's still someone else taking your money and spending it.

[adios]

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Deficit spending is part of the smoke-and-mirrors approach the government uses to arbitrarily expand spending and taxation. It works in concert with the Fed's manipulation of the money supply, especially the printing of fiat currency.

The ultimate result is both increased government spending and effective taxation, whereby the latter manifests as inflation. It is considered "good" for the country by those who favor a bigger government and taxes, since increasing spending and taxes directly is often politically unpalatable.

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I'm all for spending if there is no consequence thereof. Are you telling me that the only consequence is the "inflation tax?" Or is there a much greater day of reckoning coming.

The reason I ask this is because, while I abhor the "inflation tax," I can also plan for it if it remains at the current rate. If there is a looming "doomsday" however, it leaves us short-stacked and out of the money.

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I can't tell if you really expect an answer or not. In case you do, how could anyone tell you reliably the ex ante rate of inflation for the next 25 years or so?

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I'm asking if we're headed for a doomsday because of deficit spending...or, will it just continue with on in perpetuity with it's main cost being the moderate rate of inflation that we have seen for the last 30 years?

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And you think that someone on this forum can give you an answer that is reliable i.e. they can predict the future reliably and accurately in that they are certain to be right? I don't think you're serious. The question remains unanswered, how could anyone tell you reliably the ex ante rate of inflation for the next 25 years or so? You'll get opinions and I guess you're probably asking people to explain their reasoning when they give them. Doesn't mean that they're guaranteed to be right though.

[samsonh]

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Deficit spending is part of the smoke-and-mirrors approach the government uses to arbitrarily expand spending and taxation. It works in concert with the Fed's manipulation of the money supply, especially the printing of fiat currency.

The ultimate result is both increased government spending and effective taxation, whereby the latter manifests as inflation. It is considered "good" for the country by those who favor a bigger government and taxes, since increasing spending and taxes directly is often politically unpalatable.

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I'm all for spending if there is no consequence thereof. Are you telling me that the only consequence is the "inflation tax?" Or is there a much greater day of reckoning coming.

The reason I ask this is because, while I abhor the "inflation tax," I can also plan for it if it remains at the current rate. If there is a looming "doomsday" however, it leaves us short-stacked and out of the money.

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I can't tell if you really expect an answer or not. In case you do, how could anyone tell you reliably the ex ante rate of inflation for the next 25 years or so?

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I'm asking if we're headed for a doomsday because of deficit spending...or, will it just continue with on in perpetuity with it's main cost being the moderate rate of inflation that we have seen for the last 30 years?

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And you think that someone on this forum can give you an answer that is reliable i.e. they can predict the future reliably and accurately in that they are certain to be right? I don't think you're serious. The question remains unanswered, how could anyone tell you reliably the ex ante rate of inflation for the next 25 years or so? You'll get opinions and I guess you're probably asking people to explain their reasoning when they give them. Doesn't mean that they're guaranteed to be right though.

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No one knows Mempho. Its a tough but important question. Which is growing faster, the national debt or GDP in 5 years? 15, 25? Who knows.

[Copernicus]

"1) Tax the Middle class so much that better ideas can't come to the forefront (for lack of capital to invest)"

This makes no sense. Mr. Old Elite has the capital to invest in good ideas, and stands to gain far more from finding those investments himself than

A. Risking another Old Elite from investing in the idea and profiting
B. Risking Mr. Middle Class inventor finding a different investor and becoming Mr. New Elite, without Old Elite having a piece of the action.

The only way your theory would hold up is if there were a vast conspiracy amongst ALL of the old elites to kill the middle class inventor. As cartel behavior shows, that kind of conspiracy is doomed from the start.

There would also seem to be far more direct ways to suppress that kind of innovaton than deficit spending and taxes. (Eg legislate out IP protection and adopt an AC style contractual system that is exclusive to the old elites).

In fact, most capital investment for innovative ideas coming from the middle class is provided by venture capital firms, which are themselves capitalized by the old elites. Those avenues wouldnt exist if your "suppression" theory had any validity.

[econophile]

Anyone who takes out student loans to go to college is practicing deficite spending on a personal level. In seems sensible for the student to do this because his current income is low, but is expected to be high in the future.

An analogous situation on a national level could make deficite spending desirable.

[pvn]

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Anyone who takes out student loans to go to college is practicing deficite spending on a personal level. In seems sensible for the student to do this because his current income is low, but is expected to be high in the future.

An analogous situation on a national level could make deficite spending desirable.

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The only problem with this is that on the national level the people "taking out the loans" are not the ones who will be repaying them. If I could take out loans and make my neighbors pay for them later, my incentives to restrain my spending are very, very low.

[tolbiny]

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Production doubled.

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I forgot to laugh about this one as well. Those productivity numbers are a measure of total units, and have nothing to do with quality. Take liberty ships, 19 ships split in half and over 1500 instances of cracking were reported because of the use of low grade steel in cold waters. Of course those ships then had to be docked to be fixed so more had to be built to run while others were being repaired. Production up, productivity not so much.