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This is where most of the “anti-debt” arguments are flawed. I’ve said it before, in this thread and actually many times on this forum:
– Government debt and consumer debt are not the same.
– Debt used for investment can be a wise choice.
The often-used comparisons between government and personal debt are fundamentally flawed. There are essential differences.
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If they are so different then actually explain why. I hear that they are different but when actually faced with explaining what makes them different nobody seems to have any answers other than it is. If government debt is good and different than why do we have Greece, why do we have Japan, why do we have Argentina? Name one country that actually successfully implemented the Keynes solution and stimulated their way out of too much debt.
Really think about what government spends most of it’s money on. Medicare, Medicaid, Social Security, Welfare, Interest and Military. Of those things tell me which one is an actual investment that can produce a positive rate of return. The answer is none of them are with maybe some stuff in Military being an actual investment. Everything in that list is consumption. So in reality it’s exactly like consumer debt because it’s being used to consume goods and services.
Every dollar the government borrows from pension funds, banks, citizens, and companies is a dollar those entities can’t invest in something else.
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We haven’t been doing stimulus spending for the past 30 years – we’ve barely, and half-heatedly, been doing it for about 3 years. And there is some evidence that it has helped.
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I’d argue that all deficit spending is some form of stimulus. It should be because government spending is a component of GDP. The government has attempted to stimulate the economy every time we’ve been in a recession and we’ve had quite a few recessions other the past 30 years. Of course once we started the stimulus (spending more than we’re taking in) we never stop the additional spending. 1982 had stimulus, 1991 had stimulus, 2002 had stimulus and yet even when the economy got good again our deficit and debt continued to increase.
