Deficits

Events occurring and how they relate/affect Anabaptist faith and culture.
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Dan Z
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Re: Deficits

Post by Dan Z »

I like Appleman's sensibilities here - and Jim's point about military spending is part of what is most alarming about about the current budget to me.

Government debt is too high, and needs to be dealt with rationally - and in consideration of the health of the economy.

I'm not against government deficit spending categorically, but I think it should the exception rather than the rule - and only used in times of economic trouble. In other words, I think the government should attempt get out of the way and run bit of a surplus during stable economic times (e.g. when growth is steady and unemployment is low - like now), benefiting from the stronger income to pay down its debt. Then it should reserve deficit spending for stimulus (preferably infrastructure) during times of economic crisis (e.g. low growth, high unemployment). The government, as large as it is, doesn't spend enough to drive the economy, but there is evidence that well-placed stimulus (along with proactive monetary policy - see below) can nudge the economy toward renewed growth.

Ah...but rationality is not necessarily baked into the democratic system is it? :)

I think the same goes for Federal Reserve monetary policy BTW. During times of plenty (like now), the FED should gradually raise interest rates and tighten monetary policy to manage stable growth & inflation control, and to "bankroll" the ability to lower interest rates and ease policy during times of want - to encourage investment and growth. Frankly, the FED seems quite a bit more rational to me than congress right now.
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Josh
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Re: Deficits

Post by Josh »

It’s far too tempting for political parties to try to stymie the economy when they aren’t in power by tightening monetary policy and then loosening it when they are in office. You can see some of this in play right now.
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RZehr
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Re: Deficits

Post by RZehr »

Its amazing to me that we have a good economy right now, and we still increase deficit spending.
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Bootstrap
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Re: Deficits

Post by Bootstrap »

Josh wrote:It’s far too tempting for political parties to try to stymie the economy when they aren’t in power by tightening monetary policy and then loosening it when they are in office. You can see some of this in play right now.
How does a party that is not in power do that?
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Bootstrap
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Re: Deficits

Post by Bootstrap »

RZehr wrote:Its amazing to me that we have a good economy right now, and we still increase deficit spending.
You can live well by charging it to your credit card and not paying - for a while. And do we expect a country that does that as individuals to want their government to tax them as it spends money? That's just like paying off your credit card every month ...
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Josh
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Re: Deficits

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Bootstrap wrote:
Josh wrote:It’s far too tempting for political parties to try to stymie the economy when they aren’t in power by tightening monetary policy and then loosening it when they are in office. You can see some of this in play right now.
How does a party that is not in power do that?
Enough political control and influence before their departure to choose the next Fed chief.
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Josh
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Re: Deficits

Post by Josh »

Bootstrap wrote:
RZehr wrote:Its amazing to me that we have a good economy right now, and we still increase deficit spending.
You can live well by charging it to your credit card and not paying - for a while. And do we expect a country that does that as individuals to want their government to tax them as it spends money? That's just like paying off your credit card every month ...
Nobody wants higher taxes and/or less spending, and doing so would slow down our economy anyway.

I don’t really see a bright future for fiat based economies (or really any other kind of system for that matter). Booms and busts have been the norm throughout human history.

Our current system is flawed, but the best anyone seems to have been able to do in a democracy where 51% of people can vote entitlements for themselves paid out of taxing the other 49% 20 years from now.
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Bootstrap
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Re: Deficits

Post by Bootstrap »

Josh wrote:
Bootstrap wrote:
Josh wrote:It’s far too tempting for political parties to try to stymie the economy when they aren’t in power by tightening monetary policy and then loosening it when they are in office. You can see some of this in play right now.
How does a party that is not in power do that?
Enough political control and influence before their departure to choose the next Fed chief.
President Trump chose the current Fed chief (Jerome Powell, who replaced Janet Yellen). For what it's worth, they look like they have similar approaches to monetary policy.
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Bootstrap
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Re: Deficits

Post by Bootstrap »

Josh wrote:Our current system is flawed, but the best anyone seems to have been able to do in a democracy where 51% of people can vote entitlements for themselves paid out of taxing the other 49% 20 years from now.
We only make progress on the deficit when leaders explain how important this is. In between, the issue fades.
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Josh
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Re: Deficits

Post by Josh »

Bootstrap wrote:
Josh wrote:Our current system is flawed, but the best anyone seems to have been able to do in a democracy where 51% of people can vote entitlements for themselves paid out of taxing the other 49% 20 years from now.
We only make progress on the deficit when leaders explain how important this is. In between, the issue fades.
I run into precious few people who can really understand how a fiat money system works, why it’s better than a gold standard, and weaknesses it has. This is a real problem.

(Incidentally the Fed is one of my favourite agencies and one of the least politically influenced, although I feared that was changing in the Bernanke era.)
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