Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Classic Keynesian economics. The government needs to step in and take over spending when everyone else can't.
So racking up a huge national debt is just the government doing its Keynesian thing, pushing the AD line up.
What is classical Keynesian economics? Well, actually I can answer. what came close and that was Reagan that so called anti-Keynesian Conservatives cheer about when Reagan raised nominal GDP with huge deficits masquerading as defence spending. The only difference is there was little useful infrastructure built which is actually "Keynesian economics". The Hoover damn would be a the prime example. It created useful infrastructure and it added buying power to the private sector. I really don't think I have seen it since.
What is classical Keynesian economics? Well, actually I can answer. what came close and that was Reagan that so called anti-Keynesian Conservatives cheer about when Reagan raised nominal GDP with huge deficits masquerading as defence spending. The only difference is there was little useful infrastructure built which is actually "Keynesian economics". The Hoover damn would be a the prime example. It created useful infrastructure and it added buying power to the private sector. I really don't think I have seen it since.
Spending on infrastructure is good. But spending at all is what is really needed and the government has done that in droves.
Classic Keynesian economics. The government needs to step in and take over spending when everyone else can't.
So racking up a huge national debt is just the government doing its Keynesian thing, pushing the AD line up.
But your argument assumes that the debt is actually necessary for the economic stimulus to occur. This ignores the other ways of funding it: higher taxes, and seigniorage.
We the people, businesses, communities and governments own most of that debt.
Irrelevant unless you own more of the debt than your share of what is owed (of course including "your portion" of the holdings of US Treasury debt by companies you own stock in).
But your argument assumes that the debt is actually necessary for the economic stimulus to occur. This ignores the other ways of funding it: higher taxes, and seigniorage.
Higher taxes. All those do is increase the velocity of money. Currently not a bad thing but does not directly push AD higher. Spending now with the bill coming later pushes the AD line higher. For the government spending on debt pushes the AD line up.
Seigniorage the is roughly equivalent to the QE we got. But using it to pay for the kind of deficit we have would tend towards hyperinflation.
If you want higher taxes to cover the expense of the spending we've had then try raising the rate of compensation for labor. Increase the tax base. Upping the minimum wage to $30 an hr with enough cash (Seigniorage) into small businesses to cover the dead weight loss that would get you the taxes to balance the budget without raising taxes.
Irrelevant unless you own more of the debt than your share of what is owed (of course including "your portion" of the holdings of US Treasury debt by companies you own stock in).
Much of the National Debt is irrelevant as it will never be paid off.
Higher taxes. All those do is increase the velocity of money. Currently not a bad thing but does not directly push AD higher. Spending now with the bill coming later pushes the AD line higher. For the government spending on debt pushes the AD line up.
Seigniorage the is roughly equivalent to the QE we got. But using it to pay for the kind of deficit we have would tend towards hyperinflation.
If you want higher taxes to cover the expense of the spending we've had then try raising the rate of compensation for labor. Increase the tax base. Upping the minimum wage to $30 an hr with enough cash (Seigniorage) into small businesses to cover the dead weight loss that would get you the taxes to balance the budget without raising taxes.
$30/hour will push the low-skill jobs overseas.
Raising tax rates modestly, while also increasing spending modestly, is one way to push up the AD line without going deeper into debt.
We still have to pay the interest on it. When rates are low it does not seem so bad, but I argue rates can't stay low forever.
Although we have control over the rates, IMO they are bound to go up. Especially if our economy takes off and we get more inflation. But I don't see it strapping us any more nominally than today.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.