NATO AIR said:
I've heard his reelection would be good for the economy, but in what ways and how good?
i ask this mainly because i don't know enough about economic matters to seperate spin from reality and facts in the majority of articles and columns i've read about this issue.
Only time will tell. There are idealogical differences in economic matters, and generally the terms liberal and conservative (and I dislike labels) get reversed when it comes to the economy.
If you think that the budget should be balanced (that is basically, that spending does not exceed revenues taken in) you can be accused of slowing the growth of the economy. But by over spending the budget, and accumulating a huge deficit, that at some point can, in and by itself, limit growth, its the same end result. And I guess most people think that growing the economy is a good idea.???!!! It depends on your point of view ....Keep in mind that Bush did not veto any spending bill in his first 4 years.
The budget and deficit issues are really a smoke and mirrors game.....a very serious game. In recent times inflation, spending, gnp and many other economic indicators are "adjusted" and usually paint a prettier picture of the facts. One instance of this is off - setting deficit spending by tying up funding from other programs,two examples are the social security trust fund and the airport tax (everytime you buy a ticket that money goes into a fund to improve air traffic control and airports) As long as the money in the fund is being used to offset some expenditure ,the money in the fund cannot be spent on its intended purpose. This sort of gaming goes on ALOT. Some refer to it as Reaganomics. It is a tactic to make things look good.
But in order to REALLY understand things, (and economics issues are the most difficult) one has to consider the international economy. Volumes have been written on it. some issues: currency movements, basically when foreign investors buy american goods or invest in treasuries, they convert their currency to US $$, the greater the demand for US $$$$ the more euros, yens, or pounds it takes to buy them. Since the war in Iraq, middle eastern investors converted alot of their $$$$ holdings and took them home. The result is less foreign investment in the US, translating into LESS DEMAND for dollars in world markets. However foreign governments still back up their own currencies with US $. (globally the US$ is still the principal medium of exchage) BUT THEY LIKE A STEADY DOLLAR The numbers go something like this: in 2001 the private American holdings abroad approx $6.7 trillion., that number has dropped by about $950 billion. a weaker US $ is good news for US exporters because it makes their products cheaper in foreign markets, it also helps US companies because it make imports more expensive.
Uncertainty: The problem is that we dont save enough. To keep spending and investing at the rates we have....we have to tap into the saving of foreigners, in bookkeeping terms, undersaving, or the amount we have to borrow.... the current "account defict" $503 billion in 2002. Americans consumed $435 billion more in goods and services that the US produced and we paid for the difference by selling hundreds of billions of dollars of assets to overseas buyers and borrowing the rest from abroad. ($1.55trillion in trade deficits over the last 5 years) .
All of this has huge repercussions, and world stability and world cooperation is needed. Unfortunately, we have a long way to go.
