Pauls idiotic budget

[cbirch2]

And just to try to bring this back to the main point, an immediate $1 trillion dollar cut to government spending will drive the economy back into recession.

"Economists across the political spectrum say the impact of such drastic government spending cuts would be majorly disruptive and harmful to the economy in the short term."

“At the scale he’s talking about, it’s unlikely you could have an immediate reduction in government without hurtling the economy into recession,” says Kevin Hassett, economic policy director for the American Enterprise Institute and chief economic adviser to John McCain’s 2000 presidential campaign.

"Paul’s plan would upend the economy at a time when it’s already fragile," says Gus Faucher, director of macroeconomics for Moody’s Analytics. “That much deficit reduction in one year is going to be a huge drag on the economy . . . the reduction in spending is much greater than cuts in taxes,” says Faucher. “We’re seeing that impact in Europe right now, where severe fiscal austerity has caused big problems for the European economy.” While long-term deficit reduction is important, legislators need to make sure that the economy is strong before major cuts take effect

Ron Paul’s economic plan - The Washington Post

im sure the chief economic advisor to mccain and the director of macroeconomics at moodys are just messing around....

 

[Norman]

You do realize your assertion is a abomination to all logical thought right? Your only looking at one side of the equation.

Your essentially calling into question the debtor-creditor model. Surely the creditor, the US private sector, isnt losing money by playing that role. No.

Instead you should look at the entire equation. Borrowing means the intent to pay back later. So just as the US government has a constant stream of money coming in through the issuing of bonds, its also constantly making payments to its bond holders. So on the long run, government borrowing actually increases the amount of money in the private sector because the government pays it back with interest.

Get it now???

This is just wrong. Government takes money from private sector and returns it immediately via spending (If it doesn't that leads to deflation). When it pays back the debt it merely redistributes the wealth again. From the tax payers (or owners of cash) to the lenders.

Are you really saying that by going into debt private sector is going to come out richer, because government pays back the loans with interest(that come from private sector tax payer)? Not that adding money to the economy makes the economy richer anyway.

Government does however dictate where the loaned money and resources are going to go. Thus it is called government spending and not private sector spending. And that is why it must reduce the resources in private sector by same amount. If government spends resources, private sector can not spend those resources at the same time.

Understand the concept of a liquidity trap. Understand the IS/LM model. Understand Japans lost decade

...in fact itd be awesome if you understood anything.

A rise in the monetary base is not always the same thing as a rise in inflation, particularly when interest rates are low.

Financing of US deficits is, again, at least neutral to the private sector over the long run. The government pays all the money back with interest. When the government borrows 1 trillion in 3 month treasury notes, it returns 1.1 trillion 3 months later.

I really don't see what you are trying to say here. Government can only take wealth from private sector, and then redistribute that same wealth.

Government spending does not equal less private sector spending. Period.

Why didn't you just tell that you are a smug straight away?

You were right on inflation though, the 7% was only one asset class. Overall inflation is at around 4% though, not exactly low.