Budget deficit

[lullalullaby]

Is there any one country out there where the government hasn't got one?

 

[desi]

China probably does not.

 

[billwald]

There is nothing inherently wrong with a govt budget defecit any more than there is with paying on a house mortgage. Depends upon what the money is being used for.

 

[desi]

A budget deficit is being in the red which is fiscally irresponsible for me to do, aside from emergency government should not do it. As it is the government is making a policy of it in America.

 

[Agrippa]

A budget deficit is being in the red which is fiscally irresponsible for me to do, aside from emergency government should not do it. As it is the government is making a policy of it in America.

It's fine to run up a deficit in the case of things that will be used in the future. For example, a bridge. The bridge will probably stand for 50 years. Why should we be expected to pay for all of it when our descendents will make use of it as well? Thus, borrow some of the money for the bridge and let future taxpayers help pay for it.

 

[desi]

It's fine to run up a deficit in the case of things that will be used in the future. For example, a bridge. The bridge will probably stand for 50 years. Why should we be expected to pay for all of it when our descendents will make use of it as well? Thus, borrow some of the money for the bridge and let future taxpayers help pay for it.

Its risky and more expensive to borrow than to buy the bridge outright with current money in the bank. We don't know what the future holds so counting on it is iffy. We only have to look at the national debt and consistent federal budget deficits to see where unchecked borrowing leads. With entitlement payouts going up every year the percentage of the budget paid to interest on the debt will be eventually be crippling when notes come due.

 

[Agrippa]

Its risky and more expensive to borrow than to buy the bridge outright with current money in the bank. We don't know what the future holds so counting on it is iffy. We only have to look at the national debt and consistent federal budget deficits to see where unchecked borrowing leads. With entitlement payouts going up every year the percentage of the budget paid to interest on the debt will be eventually be crippling when notes come due.

So I assume you'll never buy a house? Are you going to save $16,000 for a car? Going in to debt for investments like that makes perfect economic sense. So the government borrowing money for bridges, education, etc is alright. Borrowing money for welfare payments (or a cheeseburger as a single individual) on the other hand, is bad. I think something like $50 billion dollars of the US deficit can be considered acceptable as it is investment rather than immediate consumption.

 

[desi]

So I assume you'll never buy a house? Are you going to save $16,000 for a car? Going in to debt for investments like that makes perfect economic sense. So the government borrowing money for bridges, education, etc is alright. Borrowing money for welfare payments (or a cheeseburger as a single individual) on the other hand, is bad. I think something like $50 billion dollars of the US deficit can be considered acceptable as it is investment rather than immediate consumption.

I own both vehicles and rent...

The problem with the US deficit is that there is no plan to curb it or start paying back the debt. If I get a home loan I get a payment schedule and severe penalties if I fail to make payments. The government has no such incentive to be responsible. What happens eventually when the interest on the debt is so high it overshadows all other expenditures, will America file for bankruptcy?

 

[Ryan Spence]

Desi,

I think they will just raise taxes. I'm with you, our government needs to watch its spending. The war in Iraq costs big and the government seems to cough up the cash. What about health care, education, and better energy technology? The government is whaco!

 

[billwald]

No, a sovereign nation cannot become bankrupt because it has the ability to generate new money.

 

[Agrippa]

I own both vehicles and rent...

The problem with the US deficit is that there is no plan to curb it or start paying back the debt. If I get a home loan I get a payment schedule and severe penalties if I fail to make payments. The government has no such incentive to be responsible. What happens eventually when the interest on the debt is so high it overshadows all other expenditures, will America file for bankruptcy?

The incentive for the government to remain responsible is the people. They are supposed to elect representatives who won't send bankrupt the government. At the same time, they are supposed to elect representatives that won't pay for everything solely out of taxes. Money can be borrowed for those commodities that are 'investment', those things that will be used for many years. If we were expected to pay for things future generations would use, then we'd experience a sever reduction in our standard of living.

Now, if the people fail in their duty and the US cannot borrow money to pay the interest on its loans, then the government will print money to pay for them, which will cause hyper-inflation (like post-WWI Germany and present day Argentina) and probably cause a global economy collapse.

 

[desi]

Desi,

I think they will just raise taxes. I'm with you, our government needs to watch its spending. The war in Iraq costs big and the government seems to cough up the cash. What about health care, education, and better energy technology? The government is whaco!

If the government gets a deomcracy going in Iraq it may pay off in spades. Education and healthcare are overpriced. Better energy technology exists but the patents are held by big oil. The problem seems more in the area of our trade deficits with China, we're building up a formidable foe.

 

[desi]

No, a sovereign nation cannot become bankrupt because it has the ability to generate new money.

Germany tried that after world war I and it took wheel barrels full of marks to buy a loaf of bread. Printing money is not the answer unless you want hyperinflation.

 

[desi]

The incentive for the government to remain responsible is the people. They are supposed to elect representatives who won't send bankrupt the government. At the same time, they are supposed to elect representatives that won't pay for everything solely out of taxes. Money can be borrowed for those commodities that are 'investment', those things that will be used for many years. If we were expected to pay for things future generations would use, then we'd experience a sever reduction in our standard of living.

The people got us where we are already, sadly I'm one.

Now, if the people fail in their duty and the US cannot borrow money to pay the interest on its loans, then the government will print money to pay for them, which will cause hyper-inflation (like post-WWI Germany and present day Argentina) and probably cause a global economy collapse.

Sorry, as I repeated your points.

 

[lullalullaby]

There is nothing inherently wrong with a govt budget defecit any more than there is with paying on a house mortgage. Depends upon what the money is being used for.

Yep I was just wondering if there actually is a govt out there who doesn't have one lol

 

[Agrippa]

Yep I was just wondering if there actually is a govt out there who doesn't have one lol

Yes, several governments don't have budget deficits. Russia, for example, is experiencing a surplus this year. It should be remembered, however, that a deficit is only for a single year; it is the amount of money spent greater than income. A national debt is the combination of every year's deficit. The US deficit is something like $500 billion this year; the debt is somewhere in the trillions. I can't think of a single country that doesn't have a national debt.

 

[Card42]

if you talking about "debt"
in terms of outstanding financial loans,
then you've got your eye
on the wrong ball.
you have to look at all the liabilities
of a country.
i mean other obligations we have to pay.
for instance,
we've promised to pay people
who are working right now
social security
and medicare benefits

the total present value
of all the US' liabilities
is around $51 trillion.
to put that into perspective:
the entire "worth"
of every good in america
is about $40 trillion.
technically,
we are bankrupt.
but don't worry
thanks more deeply entrenched welfare states
in the developed world,
we're not as bad off as they are.

i suggest reading
"The Coming Generational Storm"
it will open your eyes.