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Politics : Formerly About Advanced Micro Devices
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To: Tenchusatsu who wrote (363305)12/17/2007 5:15:31 PM
From: combjelly  Read Replies (1) of 1577693
 
"Maybe you think money can be conjured out of thin air."

It depends. The money can actually be conjured out of thin air. Simply by running the presses without selling bonds to cover the deficit would do that. It still would stimulate the economy, but would also lead to inflation. I didn't address that issue because it was only tangential to the issue under discussion.

"Or maybe it doesn't make sense to point out the money that the government pumps into the economy without also pointing out the money that the government pulls out of the economy."

Well, see, this is why I openly wonder about your grasp of economics. In the case of the tax cut, they were pulling that money out of the economy before the cut. Then they were pulling less. This is a stimulus. In this case, the government spending is neutral. Unless, of course, spending is not cut to balance the tax cut. In that case, it is a positive.

In the case of deficit spending, they are still pulling the money out of the economy, However, they are spending more than that. This is a stimulus. In this case, the government spending is a positive.

"Even deficit spending has its costs beyond the future burden of paying it back."

True. But irrelevant when we are discussing deficit spending as a stimulus to the economy. Given that the deficit spending that the Bush administration has embarked on, we are nowhere near paying it back. So it still is a stimulus.

To claim that it isn't is tantamount to believing that the money gets eaten somehow.
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