Government spending is bad for the Economy long term because
money is not allocated through free market forces. It is coerced.
So yes, some may benefit for a while. But ultimately this is money coming out of
the consumer's pocket, to rebuild New York, the Airlines, fund the war.
That money is added to sky high taxes, gas, health,home prices.
The consumer is not a money printing Bank.
There will be less money to buy big ticket items,
luxuries, you name it.
And if the consumer has no money to buy then business will make no profit.
Companies will sit there profitless and so will your investment,until the problem is resolved.
And yet there is no quick resolution in the horizon:
Taxes, The War, Gas and Health are not only not coming down,
they are going up.
Is JDSU going to go to $3? A 40% loss from here?
Buy at $3 for a quick trade and profit to 6?
TA
PS Reaganomics worked initially only because
taxes and spending where down in 1983 - 1983.
The deficits developed in 1987 because the Democtrats
spent more than was available. The Democrats will do the same now.
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You said
To:Tunica Albuginea who wrote (21667)
From: mindmeld Wednesday, Sep 19, 2001 7:37 PM
View Replies (3) | Respond to of 21696
Jeez, now I have to disagree. Spending is exactly what we need. Please refer back to your econ 101 books. Aggregate demand equals consumer spending plus business spending plus government spending minus taxes returned to consumers, all of that adjusted by the multiplier effect.
Notice in the above equation that spending is what stimulates the economy. So in the short term we need massive spending to pull us out of a recession. However, in the long term, if the government spends too much and overshoots, then we'll have massive inflation. Either way we'll have more debt and a budget deficit, which we'll have to work off again when the economy is strong. Remember Reaganomics? Spend like hell to get us out of a recession. It worked, but we racked up a shitload of debt. Maybe we can avoid the increased debt this time, but I doubt it.
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