Any opinions on deficits and economy?

[hooskins]

I am writing a 10 page paper on the subject "if deficits matter". I have a ton of reading, and gone over several basic econ principles to come up with an idea. But does anyone have any opinions about one or the other?

[firstdown]

Its all Bush's and the Republicans fault. If Obama is elected everthing will be just fine.

[GTripp0012]

The entire global economy is based on the concept of debt, so a deficit in an of itself is just a fact, not a good thing or bad thing.

It's when you start stringing deficits together and lose control of the ability to pay back the debts that you have a real credibility problem.

[hooskins]

Thanks first...just for the record I am pretty fiscally conservative being an economics major and all.

[JWsleep]

Originally Posted by hooskins

I am writing a 10 page paper on the subject "if deficits matter". I have a ton of reading, and gone over several basic econ principles to come up with an idea. But does anyone have any opinions about one or the other?

Let us know what you find out!

My intuition is that some debt is fine; too much can affect the rest of your economics in bad ways. (That's no help, I know! )

[hooskins]

Yea generally speaking deficit spending is alright based on what your general beliefs are. If you are a Keynesian then it is ok, until you reach near full employment, then inflation occurs.

Major factors to concern is the current dependence on foreign investment to fund borrowing, rather than domestic. Also raising taxes isn't always the best answer either, but if invested properly it is ok.

[dmek25]

Originally Posted by firstdown

Its all Bush's and the Republicans fault. If Obama is elected everthing will be just fine.

your finally learning

[Beemnseven]

Originally Posted by firstdown

Its all Bush's and the Republicans fault. If Obama is elected everthing will be just fine.

I know you're trying to be sarcastic, but Bush and the Republicans did have total control over everything for about six years and government did nothing but expand. Obama will gladly take over where they left off.

The spending for all of these foreign misadventures is the biggest problem I have. There's the $10 billion a month for Iraq, for which McCain sees no end in sight. In addition, he and the Neoclowns are just itching for a fight with Iran, then they're happy to provoke the Russians by trying to get Ukraine and Georgia into NATO -- so they apparently don't have a problem saber-rattling and picking a fight with the Red Army either. What's that going to cost us?

To this current crowd of Republicans, there is no place on earth that couldn't benefit from having U.S. troops on the ground and an unlimited supply of cash from the American Taxpayer to fund them and solve every problem they can find.

I can't wait for this group of Republicans to get their asses kicked out of office in about two weeks -- with the exception of Ron Paul of course.

[MTK]

Originally Posted by Beemnseven

I know you're trying to be sarcastic, but Bush and the Republicans did have total control over everything for about six years and government did nothing but expand. Obama will gladly take over where they left off.

The spending for all of these foreign misadventures is the biggest problem I have. There's the $10 billion a month for Iraq, for which McCain sees no end in sight. In addition, he and the Neoclowns are just itching for a fight with Iran, then they're happy to provoke the Russians by trying to get Ukraine and Georgia into NATO -- so they apparently don't have a problem saber-rattling and picking a fight with the Red Army either. What's that going to cost us?

To this current crowd of Republicans, there is no place on earth that couldn't benefit from having U.S. troops on the ground and an unlimited supply of cash from the American Taxpayer to fund them and solve every problem they can find.

I can't wait for this group of Republicans to get their asses kicked out of office in about two weeks -- with the exception of Ron Paul of course.

A big hells yeah to that

[That Guy]

leverage isn't bad, but if you can't pay your debts or create more money to pay them, you get inflation, less foreign investment, higher interest on new loans, etc

having an exploding debt year after year will eventually create problems, we're just lucky cause the world is tied to our economy and our national debt is only about 25% at 11trillion (i think) so you haven't seen the rampant inflation or credit problems (as a nation) that other countries would see if they ran themselves like we have...

[The Goat]

Hooskins, since you're doing the paper now it's probably good timing to emphasize the crowding out principle. I've been a little surprised economists have not talked more about the coincidence of massive deficit spending and the largest national debt in our nation's history w/ the earlier liquidity tremors (before light was cast on the shadow financial/insurance market and a lot of folks shit their proverbial pants). In fact, I remember hearing an analyst on Bloomberg discuss receding liquidity prior to all this - can't remember his name but I bet a little research will land you some material.

[hooskins]

Thanks fellas I finished this paper.