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Politics : THE WHITE HOUSE
SPY 688.93+0.5%4:00 PM EST
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To: longnshort who wrote (10836)11/14/2007 6:03:19 PM
From: DuckTapeSunroof  Read Replies (2) of 25737
 
"we could use gold,"

What gold?

(You have to own gold to be able to spend it. Since the US government refuses to confirm how much gold is in Fort Knox - but has largely been selling down gold reserves for decades now - it's likely safe to assume we haven't enough to 'cover' but a very small fraction of indebtedness....)

"... tax revenues"

You mean the government could always raise the level of taxation enough to cover the ongoing trade deficit?

Yeah, guess they could... but if they continued to deficit-spend far in excess of the revenues in that way would lie disaster. (Not even mentioning, of course, the decline in economic activity that would happen when the level of taxation of the economy was jogged upwards. That, too, would reduce revenues even further.)
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