Its like investing with $$ you got from a cash advance on your Credit Card. If you arnt making over 20% returns, you are actually loosing money. How many people can make 20% returns for years and years and years? How much are you willing to bet that our Federal Government is the one who can be money wise enough to pull it off?[/quote]
It’s not quite like that. The government is borrowing at about 3.75%.
For example let’s say the economy’s future growth capacity is 5%. At that time, we may increase taxes and trade off fiscal responsibility for a lower growth rate of 4%, over years to pay down debt.
If growth is 0% it would be illogical to implement austerity measures that trigger a recession and decrease tax receipts.
In the future, once out of the recession, government spending increase should capped to population growth plus productivity growth less a certain amount to pay down the national debt.[/quote]
What makes you think 5% growth is possible with all the debt we have now (and we’d be amassing even more debt between now and then, according to your theory)?
I’m not opposed to some govt spending, but think that what we’re doing (focusing on asset prices instead of useful jobs) is a huge mistake. Perhaps, once deflation has really done its job, the govt can spend a bit in order to jump-start the economy. In doing this, we can be assured that we are printing *stronger* dollars that will have a greater effect per dollar printed, vs. printing when things are already so wildly inflated. The effects of our printing are muted if we try to prevent the deflation from happening in the first place, vs. printing once deflation has been allowed to fully wipe-out any excesses and misallocations. .
The longer we try to prevent deflation from happening in the first place, the bigger our problems will become down the road, IMHO.
