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Politics : View from the Center and Left
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To: TimF who wrote (15596)3/31/2006 12:23:22 PM
From: Dale Baker  Read Replies (2) of 541944
 
I was referring to both deficits, budget and trade, and looking at historical evidence from many countries that says countries who run huge twin deficits almost inevitably run into major economic trouble and often major crises.

The problem is that people grumble a bit about government spending, have zero clue about the trade deficit and the impact huge foreign reserves of dollars could have on us, they are told the economy is just great so go borrow and spend more and so it goes.

In the process they are told that tax cuts are good and even a mention of an increase is bad, and it will undermine the consumer boom we enjoy today.

We aren't earning enough to pay for what we spend at home or abroad. It's really that simple. Can you point to another country that ran huge deficits for decades and prospered? As I recall, the old imperial powers made a point of selling stuff to their colonies and presumably didn't pay much for the raw materials they took out, which is more than we can accomplish (but I never studied actual data from a comparable world-dominating power at any point in history).

I think the metaphor holds up. It reminds me of the US Army including cigarettes in ration packs until not so long ago. That was supposed to be no problem too. A friend's father died from lung cancer after he started smoking as a US Army draftee.

Just an anecdote but it illustrates (though doesn't prove) my point. Throw in the number of families who go bankrupt when they live beyond their actual means and the story gets even more vivid.
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