Zeev, you said
"In this country, budget surpluses have historically led to
at least recessions, and bear markets"
Which came first--how much of the surplus is taxes from cap gains?
Maybe if the market crashes, the surplus dries up, and we wont
have a recession hehe.
...and...
"The recession results from the simple fact that the government takes
out more money from the economy than it puts in, thus , in essence
soaking or reducing aggregate demand."
I'd bet there have been long periods of recession which have
little to do with the federal budget. When the economy finally
slows down after this cycle, maybe it will be because of events
outside of the U.S. For instance, SEA exports it's way back to
health, and our trade deficit continues to balloon. How exactly
is this huge trade deficit financed--where is all the money
coming from?
I think I understand your liquidity argument though, it is the
main argument put forth over on the Kahuna thread--consumers
eventually are tapped out, business borrowing eventually
tops out, and the whole machine just winds down.
Finally, in these discussions, you always hear the jargon
"aggregate", Zeev used it in the passage I quoted. What is
that? Sorry, guess I should have taken an econ class back
in school. |
