Canadian Explains U.S. Debt Crisis

[Kimura]

If the government were to constantly run a balanced budget, where spending was equal to tax revenue, the domestic private sector's net financial wealth would be zero.

how so?? Is this good or bad??

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

 

[EdwardBaiamonte]

If the government were to constantly run a balanced budget, where spending was equal to tax revenue, the domestic private sector's net financial wealth would be zero.

how so?? Is this good or bad??

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

so why be so afraid to tell us if it is good or bad????

 

[Rshermr]

If the government were to constantly run a balanced budget, where spending was equal to tax revenue, the domestic private sector's net financial wealth would be zero.

how so?? Is this good or bad??

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

Yes, indeed. Rational and understandable. But you may want to consider responding to ed. As a libertarian, and a conservative tool, he has proven his inability to consider rational thought. You lost him in the first sentence or two.

 

[EdwardBaiamonte]

his inability to consider rational thought.

IF I've departed from Friedman, please say where or admit you lack the IQ to do so.

 

[Kimura]

how so?? Is this good or bad??

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

Yes, indeed. Rational and understandable. But you may want to consider responding to ed. As a libertarian, and a conservative tool, he has proven his inability to consider rational thought. You lost him in the first sentence or two.

I enjoy debate, so it's par for the course.

 

[EdwardBaiamonte]

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

Yes, indeed. Rational and understandable. But you may want to consider responding to ed. As a libertarian, and a conservative tool, he has proven his inability to consider rational thought. You lost him in the first sentence or two.

I enjoy debate, so it's par for the course.

would you enjoy saying if a deficit is good or bad?? or is it neutral because one man's deficit is another man's surplus??

 

[Kimura]

how so?? Is this good or bad??

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

so why be so afraid to tell us if it is good or bad????

Obviously, it's not a good thing for the domestic private sector to run a deficit. This is what precipitated the housing bubble under Clinton.

It's obvious if one sector is going to run a budget surplus, then another sector must run a budget deficit. We have to analyze this in terms of stock variables, meaning if one sector is to accrue net financial wealth, then another sector must increase it's debt by the exact same amount. It's impossible for all sectors to simultaneously increase net financial wealth by running surpluses.

 

[EdwardBaiamonte]

I just explained it. One sector's deficit must equal another sector's surplus.

For example, let's say that the foreign sector runs a balanced budget. In this scenario, the domestic private sector has an income of $200 billion while its spending equals $180 billion for a budget surplus of $20 billion. By basic accounting identity, the government sector's budget deficit will be $20 billion over the same year. The domestic private sector will accrue $20 billion of net financial wealth during the year, which will consist of $20 billion in government sector liabilities.

On the flip side, for example, let's say the foreign sector spends less than it's income, accumulating a budget surplus of $40 billion. During the same time period, the government sector also spends less than its income, accumulating a budget surplus of $40 billion. If we use our accounting identity, we know that over the same time period the domestic private sector must have a budget deficit of $80 billion ($40 billion plus $40 billion). The net financial wealth of the domestic private sector will have decreased by $80 billion as it had to issue debt and sell its assets. During this same time period, the government sector will have increased its net financial wealth by $40 billion by increasing claims on other sectors and decreasing its overall debt burden. The foreign sector will have also increased it net financial position by $40 billion, mostly by increasing claims on other sectors and reducing its debt load the same as the domestic financial sector.

so why be so afraid to tell us if it is good or bad????

Obviously, it's not a good thing for the domestic private sector to run a deficit. This is what precipitated the housing bubble under Clinton.

can you say if a government deficit is a good or bad thing and why????

 

[Kimura]

so why be so afraid to tell us if it is good or bad????

Obviously, it's not a good thing for the domestic private sector to run a deficit. This is what precipitated the housing bubble under Clinton.

can you say if a government deficit is a good or bad thing and why????

I can unequivocally tell you they are a great thing. The budget deficits of the US government have added net financial assets to the private sector, which creates the demand for real goods and services that have allowed Americans to maintain their income growth. This very income growth has enabled Americans to save and accrue financial assets at rate far greater than would have been possible without budget deficits. Period.

 

[EdwardBaiamonte]

I can unequivocally tell you they[federal budget deficits] are a great thing.

too stupid and 100% liberal of course. Would you say a yearly deficit of $5 trillion would be a great thing too??

 

[Rshermr]

Obviously, it's not a good thing for the domestic private sector to run a deficit. This is what precipitated the housing bubble under Clinton.

can you say if a government deficit is a good or bad thing and why????

I can unequivocally tell you they are a great thing. The budget deficits of the US government have added net financial assets to the private sector, which creates the demand for real goods and services that have allowed Americans to maintain their income growth. This very income growth has enabled Americans to save and accrue financial assets at rate far greater than would have been possible without budget deficits. Period.

You are confusing ed. He is incapable of a rational discussion. But he will post something stupid. I think he believes he is profound. Poor con tool.

 

[EdwardBaiamonte]

can you say if a government deficit is a good or bad thing and why????

I can unequivocally tell you they are a great thing. The budget deficits of the US government have added net financial assets to the private sector, which creates the demand for real goods and services that have allowed Americans to maintain their income growth. This very income growth has enabled Americans to save and accrue financial assets at rate far greater than would have been possible without budget deficits. Period.

You are confusing ed. He is incapable of a rational discussion. But he will post something stupid. I think he believes he is profound. Poor con tool.

typical liberal violent personal attack when liberal lacks IQ for substance