Originally posted by uzlessNone of that went to Bechtel, Boeing, Raytheon, Lockheed Martin, Local Iraqis, U.S. soldiers or medical supplies?
Uh not quite.
Each US citizens took $20,000 out of the bank and gave it to American corporations like Haliburton.
Then where did all the money for that stuff come?
Originally posted by uzlessIt absolutely should. Good point.
That would be true except the US government also slashed spending on social programs to partially offset the cost of the war. Social programs are largely used by middle -poor income families who now have to pay more user fees or simply do without the services that were once provided.
I will grant that doing without a service is hard to quantify in economic terms but it should still be considered when one determines the "cost" of the war.
Originally posted by MerkThe macroeconomic data is far too complicated to simply apply post hoc analysis. As you understand from your response, just because some event x happens after some other event y does mean x has anything directly to do with y.
To be honest, I don't have enough data to prove it causal. (older data isn't all that reliable anyway) Even if I did, I wouldn't input the numbers into a computer program to figure it out because my personal interest extends only to market returns, not the overall economy.
But, there is ample evidence that budget surpluses and paying down debt aren't necces gma that deficits are bad for the economy. The evidence simply does not support it.
Let's take your claims about the modern data as fact for the moment. There are other ways to interpret your findings that are consistent with our understanding of economics.
The business cycle for example could potentially account for the observations. We know that real GDP cycles about every 2-6 years; expansions are followed by recessions which are followed again by expansions. During expansions real GDP and therefore real income increases. This in turn increases tax revenue (setting aside for the moment changes in the tax code). Increased tax revenue pushes the budget toward surplus (of course, the government can always choose to increase expenditures and remove the deficit). Then as the economy cycles back toward recession, real tax revenues decrease, pushing the budget toward deficit. Along with this effect comes a political effect. Households feel the crunch of recession and demand an increase in government expenditures (or perhaps opportunistic politicians, seeing a chance to gain popularity, spend more). This pushes the budget further toward deficit. In this way, the real business cycle could be causing the fluctuations you observe in the data, and under this scenario deficits would still be a burden because they must be financed, and therefore eventually out of future income.
Personally, I'm not against deficits in general. Large deficits however are a problem. Not only is there a "crowding out" of private investment, but eventually debt service becomes larger and larger. In a country like the US, with a tremendous GDP, we can sustain large debts, but we cannot maintain indefinitely large ones. That is to say, we cannot continually run deficits. At some point, shortfalls must be offset with future payments, in other words, higher taxes or decreased expenditure.
I wish this were not the case. If that were the case, then simply running a government Ponzi scheme would solve many of our economic troubles.
MERK: You seem to be in possession of economic facts. Uzless posted the following and I have searched for, but cannot find any ‘slashes’ or cuts to USA social programs since the Iraq war began. Could you point me to a source?
”That would be true except the US government also slashed spending on social programs to partially offset the cost of the war.”
Originally posted by MacSwainWhy not do the research yourself?
MERK: You seem to be in possession of economic facts. Uzless posted the following and I have searched for, but cannot find any ‘slashes’ or cuts to USA social programs since the Iraq war began. Could you point me to a source?
”That would be true except the US government also slashed spending on social programs to partially offset the cost of the war.”
http://www.gpoaccess.gov/usbudget/fy08/browse.html
http://www.gpoaccess.gov/usbudget/fy08/pdf/spec.pdf
I'll be checking out the NIPA tables when I get a chance, and I'll take a closer look at the relationship between GDP and government debt.
But, there is ample evidence that budget surpluses and paying down debt aren't neccessarily good things. One of our biggest depressions came after Jackson paid down our debt to zero. The last recession came after 4 years of surplus. Not to mention numerous times inbetween when surpluses or rapidly shrinking debt didn't do us any economic favors. If debt was bad, then the economy should have been fine, but it wasn't.
I assume the depression under Jackson's administration that you're referring to was the Panic of 1837. That had nothing to do with paying down the debt. Rather it had everything to do with his not re-chartering the national bank. This led to rapid inflation, widespread bank failures, and eventually a big depression.
I think it's also important for everyone to be clear about the difference between a deficit and government debt (I'm sure you know, but others might not.) A deficit is when current outflows (e.g. government transfers to households, expenditures on stuff like missiles and office computers, or debt repayment/financing) exceeds inflows (e.g. tax revenue, income from government commerce, tariffs). Government debt is the stock of owed repayment from the government to the public. One important thing to note then is that a government could have a surplus and still be in debt, or vice versa, run a deficit for a period but actually be owed money.
I bring this up because often people mistakenly equate budget surplus with debt repayment. That isn't necessarily true. Other things could be done with the surplus instead. For instance, when George W. Bush took office and the Republicans won Congress, they spent much of the accumulated surplus by transfering it back to households (i.e. tax refund).
That said, nobody, even the US government, can continue to borrow forever. Eventually, as we've seen many times some other foreign countries, interest rates rise as the perceived risk of default and/or depreciated currency increases. This makes borrowing more difficult for the govt in the future, which may be very inconvenient in future circumstances. Now, the US is still thought of as a pretty safe bet, and although dollar denomination isn't quite as popular as it was in the past, it is still the major currency held abroad, so I'm not trying at all to be an alarmist. I'm just saying quite simply that the US govt can't run a Ponzi scheme. Eventually, they have to pay. This is one "cost" to incurring government debt.
Like I said in my post above though, when I get a chance I'll take another look at the data on the government deficit and debt. I have it on my computer in my office.
Originally posted by telerionWhat in my post indicated to you that I had not done research?
Why not do the research yourself?
http://www.gpoaccess.gov/usbudget/fy08/browse.html
http://www.gpoaccess.gov/usbudget/fy08/pdf/spec.pdf
I'll be checking out the NIPA tables when I get a chance, and I'll take a closer look at the relationship between GDP and government debt.
Originally posted by MacSwain
What in my post indicated to you that I had not done research?
This.
MERK: You seem to be in possession of economic facts . . . Could you point me to a source?
Or perhaps it was the way you've nuthugged Merk more than an Austrian anarchist at a Hayek Society meeting.
Why should Merk find which programs had their funding reduced? Look it up. I sent you a link to the Presidents budget. You can find old budgets as well.
Anyway, I'm sure there are plenty of programs that were cut back. That alone however won't prove Uzless's point. He needs to show that they were cut to pay for the war and not purely for political reasons. With a conservative Republican in office and a Republican dominated Congress, it's only to be expected that spending on social programs was gonna be reduced. Not a jab at Repubs; it's just part of their philosophy.
Originally posted by telerionUS Current Trade Deficit Budget Deficit Gvt. Debt
The macroeconomic data is far too complicated to simply apply post hoc analysis. As you understand from your response, just because some event x happens after some other event y does mean x has anything directly to do with y.
Let's take your claims about the modern data as fact for the moment. There are other ways to interpret your findings that se, then simply running a government Ponzi scheme would solve many of our economic troubles.
Yr. (Millions) (Miilions) (Millions) (Billions)
75 18,114 12,404 -53,242 542
76 4,293 -6,082 -73,732 629
77 -14,337 -27,246 -53,659 706
78 -15,143 -29,763 -59,185 777
79 -290 -24,565 -40,726 829
80 2,316 -19,407 -73,830 909
81 5,031 -16,172 -78,968 995
82 -5,533 -24,156 -127,977 1,137
83 -38,695 -57,767 -207,802 1,372
84 -94,372 -109,072 -185,367 1,565
85 -118,159 -121,889 -212,308 1,817
86 -147,176 -138,538 -221,227 2,121
87 -160,661 -151,684 -149,730 2,346
88 -121,159 -114,566 -155,178 2,601
89 -99,485 -93,141 -152,623 2,868
90 -78,965 -80,864 -221,147 3,206
91 3,743 -31,135 -269,269 3,598
92 -47,998 -39,093 -290,334 4,002
93 -81,997 -70,195 -255,085 4,351
94 -118,031 -98,379 -203,228 4,643
95 -109,281 -96,265 -163,991 4,921
96 -120,216 -103,942 -107,473 5,181
97 -135,978 -108,178 -21,935 5,369
98 -209,560 -164,868 69,200 5,478
99 -296,816 -263,252 125,252 5,606
00 -413,454 -378,344 236,151 5,629
01 -385,703 -362,692 121,161 5,770
02 -473,943 -421,735 -157,799 6,198
03 -530,669 -496,508 -377,575 6,760
04 -603,224 -605,321 -412,144 7,486
05 -791,508 -716,729 -318,300 7,933
GDP data can be founnd at the BEA.
http://www.bea.gov/national/nipaweb/TableView.asp#Mid
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=1&FirstYear=2006&LastYear=2007&Freq=Qtr
Since the third quarter of 1982 there have been only a handful of negative quarters.
Q4-1990 -3.0%
Q1-1991 -2.0%
Q3-2000 -0.5%
Q1-2001 -0.5%
Q3-2001 -1.4%
Now, as you can see, 3 of the 5 negatives quarters over the last 25 years came at the tail end of our only 4 years of surplus.
Causal? Probably not. But again, I don't care if it is. More likely, it's not causal either way. I'm just trying to dispell the myth that deficits are bad.
Edit: Those numbers weren't jammed together when I was typing this post. Not my fault they're all garbaged together.
Causal? Probably not. But again, I don't care if it is. More likely, it's not causal either way. I'm just trying to dispell the myth that deficits are bad.Deficits are not bad if managed properly overtime. When they reach approx 30% of GDP it's gettiing out of hand. 40-50% and your into 3rd world status.
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Canada had a bad debt to GDP ratio in the early 90's under our conservative government and it took the Liberal goverrnment almost 10 years to get our ratio back down.
Originally posted by uzlessYou have no idea what you're talking about.
Deficits are not bad if managed properly overtime. When they reach approx 30% of GDP it's gettiing out of hand. 40-50% and your into 3rd world status.
Canada had a bad debt to GDP ratio in the early 90's under our conservative government and it took the Liberal goverrnment almost 10 years to get our ratio back down.
Originally posted by uzlessDeficits of 30% of GDP would be insane. I think you mean debt, not defecit. A debt of even 50% of GDP isn't too bad as long as you have a good reputation and favorable expected future growth.
Deficits are not bad if managed properly overtime. When they reach approx 30% of GDP it's gettiing out of hand. 40-50% and your into 3rd world status.
Canada had a bad debt to GDP ratio in the early 90's under our conservative government and it took the Liberal goverrnment almost 10 years to get our ratio back down.
Originally posted by telerionWhat an insulting small minded cretin. I gave merk a compliment and you got your egotistic little feelings hurt. oooh - itsy too bady-bady for de widdle tele. :'(
Originally posted by MacSwain
What in my post indicated to you that I had not done research?
This.
[b]MERK: You seem to be in possession of economic facts . . . Could you point me to a source?
Or perhaps it was the way you've nuthugged Merk more than an Austrian anarchist at a Hayek Society meeting.
Why should Merk find which ...[text shortened]... l programs was gonna be reduced. Not a jab at Repubs; it's just part of their philosophy.[/b]
You think it went un-noticed that immediately after I paid him a compliment you posted 'with him' to show your "expertise" in macroeconomics and post ad hoc analysis. 🙂 How transparent! Why not just post your resume', ego-sweetie?
What you posted as reason for your ill-tempered response to a question (I asked Merk) so you could give the smart arsed reply "why not do the research yourself?"...you left out the part "I have searched for, but cannot find any". I know you have limited abilities to comprehend the language...but acknowledging the second part would have left you with no excuse to attack me for complimenting Merk, in what you obviously consider 'your' private field of knowledge.
Just calm down, in future any economic questions I have will be directed your way. It is just so damned hard to keep you girls happy! 😕