Mrcauser’s Weblog

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I made this case a long time ago……

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Deficit spending has always worked. Giving away our middle class jobs doesn’t. Most people believe the opposite.

History has shown us that the government can borrow as long as they can find people to lend them the money. We’ve been doing it since at least the last “Great Depression”. But giving our industry away to foreign entities, called free trade, so the foreigners can lend us money is a recipe for disaster. You end up spending the borrowed money on the broke dicks you have just created. This in turn leads to more government. Soon you can’t fart without permission.

Of course, the people  doing it make out like bandits. Eventually you runout of foreigners, then what?

In Defense of Deficits | The Nation

To put things crudely, there are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that’s basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors–public deficits or private loans–has to be in action.

For ordinary people, public budget deficits, despite their bad reputation, are much better than private loans. Deficits put money in private pockets. Private households get more cash. They own that cash free and clear, and they can spend it as they like. If they wish, they can also convert it into interest-earning government bonds or they can repay their debts. This is called an increase in “net financial wealth.” Ordinary people benefit, but there is nothing in it for banks.

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Written by mrcauser

May 31, 2010 at 10:21 pm

Posted in Uncategorized

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