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Why does US Gov have to borrow so much money? - Page 3
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Burrfoot
United States1176 Posts
Guns <3 | ||
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Tamburlaine
Canada288 Posts
At present, the interest rates on the money the US is borrowing is less than the rate of inflation. Effectively, the US is paying negative interest - or, to put it another way, the US is being paid to borrow money. Lenders (which isn't just OMG CHINA; a massive chunk of US debt is domestically owned) do this because 1: the US is a big, reliable thing that everybody expects will be there tomorrow, and 2: it's cheaper than sitting on their money and letting it depreciate. EDIT: #3 is just a terrible idea. Never being able to go into deficit spending is just horribly inflexible. | ||
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tar
Germany991 Posts
On October 07 2013 09:36 Birdie wrote: Without getting into this too much because I don't know enough about Germany's economy, how do you know that the boosts they used actually helped their economy? Could they not have prolonged it and made it worse? Well, of course that is not entirely impossible. However, I'd say prima facie it worked. The government took action, the situation improved in comparison to other countries. With a grain of salt: the industry itself said it did (yet, why wouldn't they say so, they got a lot of money...). | ||
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stroggozzz
New Zealand81 Posts
On October 07 2013 03:38 Birdie wrote: Empirically speaking it doesn't work. In theory it seems to work, but in actual practice I don't know of any country where it's working well and will continue to work well. Part of the reason for that is that the support is not withdrawn in times of an economic boom, because that would result in unhappy voters. And unhappy voters means losing power next election. In many ways democracy fuels Keynesian economics because it's easy to make voters happy in the short term by just giving them more services (bribes?  ).I'm not particularly knowledgeable about the Scandinavian economy and way of doing things. However, if I understand right, while the government is a big spender, business in general is relatively unregulated. This means that there's a lot of money from unregulated business, which the government then taxes to spend on welfare and so on. http://en.wikipedia.org/wiki/Economy_of_Hong_Kong Hong Kong is probably the best example of a recent laissez faire/Austrian economy. http://en.wikipedia.org/wiki/Freest_economy has a list of countries ranked by economic freedom according to Adam Smith's theories, which are basically Austrian economics. Yes, the defaulting would be terrible for the USA in the short term. But I don't think it's possible for the USA to pay off the debt so there's little else they can do besides make the hard decisions. No one wants to though, so they'll probably try to keep going until everything collapses. Keynesian economics usually makes recessions take a lot longer to sort themselves out because the market isn't allowed to fix the things that are wrong. you should read Adam Smiths the wealth of nations if you got lots of spare time. most of the things said about adam smith in schools are very twisted. He is actually closer to Karl Marx in economic theory, not even joking here. http://www.chomsky.info/books/warfare02.htm | ||
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stroggozzz
New Zealand81 Posts
here's the full quote about the long run from keynes: “This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the sea is flat again.” If you don't fix the short term you are stuck in a bad situation for a looong time anyway. That's what Paul Krugman says in his book 'End this depression now'. We have been in a depression for 5 years now, the great depression lasted for 10 years i think, up until WW2 brought them out of it. Not that i condone things like wars as being used as a Keynesian stimulus. If you don't do things that fix the short term, people who are unemployed for long periods of time might become unemployable. There are a lot of factors to consider here, it's hard to take into account the social problems that arise from the short term suffering. | ||
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Birdie
New Zealand4438 Posts
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unkkz
Norway2196 Posts
On October 07 2013 05:30 8882 wrote: It's funny, how you thow questions and when you get answers you dont like (aka "Norway best country in the world!!!!!!1") you get angry - and ask me if I am an economist. The things that I wrote above are well known FACTS, that were discussed to death not even by economists, but even by newspapers. And as for your question, in fact I am, but it does not matter at all. The Norway way worked in Norway, but the question is: wouldnt the Laffer's curve still work and wouldnt it be even better in Norway, if you had lower taxes? I am not against the welfare state at all, but the Norwegian way seems to be coming to an end due to internal reasons that Ive described above. I showed no signs of being angry, i don´t really understand how you could interpret a normal discussion with arguments as me being angry. Besides i´m not even Norwegian so i don´t really have any nationalistic sympathies to the country other then living here. I asked you if you were an economist because you threw out some pretty wild speculations that frankly put "came out of your ass" such as immigrants living on wellfare in scandinavia. You have no real basis for that claim at all, neither do you have one about Norway and oil. Saying Norway is doing great because of oil is a dumbed down simple answer someone like me, who is completely clueless would give. Ofcourse the oil helps, but even without it Norway would probably do OK. And your internal reasons, again with the immigrants, are 100% baseless. Please show me any serious source that claims that the scandinavian wellfare states are coming to an end due to/partly due to immigrants leeching wellfare. And personally, i wouldn't wan´t lower taxes, instead of free healthcare my taxcut money would go to insurance companies that does everything within their power to screw me out of treatment. I enjoy free college education and healthcare. There have been articles written by Americans as there was just an election here, that have been treated in America and in Norway. The first question in the US was always "How will you pay for this?" where as in Norway was "When can we start you on treatment?" and there were no real differences in how good the care was. | ||
Milkis
5003 Posts
There are roughly speaking two opposing schools of thought in economics: Keynesian economics, and Austrian economics. Austrian economic states that the market will automatically correct itself whenever bad things happen, as long as it is deregulated. That is, if a product available for sale is too expensive, then either no one will buy it and the price will go down, or a competitor will start up selling a similar product for a cheaper price. If there are too many companies in an industry for the amount of customers, then some companies will go bankrupt until the number of companies suits the amount of customers. If a need of the consumers is not being met, a new company will start up which will produce a product to meet that need. I'm going to say this: It has never been "Keynesian" vs "Austrian". Austrian Econ is closer to a school of sociology that won't fit into economics because they lay very different assumptions than to what "mainstream" economics goes for. Free market does not imply Austrian, since many economists who believe in the free market find their justification through mainstream economics rather than the assumptions of Austrian economics. I feel like Keynesian theories are often bastardized, and many of the real criticisms have been answered. I'm also not fond of this "divide" people on the internet keep setting up. This assumes that there's an actual school of thought difference, when none exists in mainstream, academic economics. Sure, some individual economists have a specific stance that's based around their view of efficiency of the government, but in the end the underlying economics is very identical. | ||
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tar
Germany991 Posts
On October 07 2013 20:39 Birdie wrote: Unfortunately there's no evidence that I know of that Keynesian stimulus actually helps shorten the current distress, other than for a VERY short amount of time. Indeed, I've read of the Great Depression being prolonged a large amount by Keynesian stimulus. On the other hand, we have Hong Kong, with a mere 2.8% drop in real economic growth during the 2009 financial crisis, with a quick recovery. HK is different from other economies (e.g. size, connection to china, political system, history, etc) in so many variables that it really isn't comparable. | ||
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