Federal deficits are necessary to a growing US economy.

First, I would like to extend my wish that Pro be all right, as I am sure Pro would not want to have given up her last round of positive arguments without unforeseen circumstances. I shall start by defending a point Pro would likely bring up; deflation may well be caused by savings and/or loss of money overseas in the case of a non-fiat currency such as gold or silver. Deflation is a good thing; it will reduce the price of almost all material factors across the board, making finished goods significantly cheaper. It will also help the retired on more fixed income and reward savers with more for their money to purchase. Some, including Pro, may claim that such deflation will also work on labor; however, labor is a service offered for profit by the laborers, and the demand for it continues to raise the price. Even now, with a minimum wage, less than 5% of all people working in the United States work legally at or below the minimum wage [1]. Essentially, deflation from saving or in the case of a commodity currency going overseas for imports is a positive point in my case. Second, I would like to counter some of Pro"s Arguments. If listed out, her argument looks like this. P1: Economic Growth is measured by GDP. P2: GDP does not increase if spending does not increase. C1: Spending must increase to increase GDP. P1: Saving, being neither spending or investing, does not increase GDP. P2: A U.S. trade deficit means more U.S. dollars are leaving the United States. C2: Money that is saved or sent overseas does not increase the GDP. P1: Government can create the money lost by savers and overseas exchange P2: When the government runs a deficit, the private sector runs a surplus. C3: Government can run a budget deficit and increase GDP. C1: Spending must increase to increase GDP. C2: Money that is saved or sent overseas does not increase the GDP. C3: Government can run a budget deficit and increase GDP. CF: Government should run budget deficits equal to or greater than money saved or spent overseas to boost the economy. If Pro has a contention with this formulation, she may state so. I have contentions with at least 4 arguments, and shall explain why. "When government is running a budget deficit, the private sector is gaining a surplus." Government does not actually produce any resources (unless it is a completely socialized sector of the economy, which the U.S. thankfully shies away from). All governments may do is shift the resources in existence. As can be understood from the posts in Round 2, the main method of government deficit spending will be to increase inflation by borrowing from the Federal Reserve. As I stated in my Round 2 arguments, inflation allows government to spend on what the actors of government wants, and it shifts where funds go in the private sector by giving the first receivers an incredible boost in purchasing power compared to all other citizens of the United States; as this point has yet to be contended, I will not spend more time on it. The entire argument for C2 is fallacious. Saving will remove dollars from the GDP, but that is only because the resources or services the saver would like to buy are not yet available; it is not use spending to increase/maintain the current production structure if such a structure is not producing what consumers want. Also, saving makes each dollar purchase more; the savers are helping the spenders gain more produce for their money, and this works to make factors of production cheaper as well, leading to economic growth. In the case of foreign trade, the manner in which Pro describes it is not how the real world operates today, and the argument would still be false when considering non-fiat currencies. Today States control the power to print fiat currencies, and they are used all over the world.When one wishes to trade American corn for, say, French wine, the two grocers separated by the Atlantic have to exchange their home currencies (dollars and euros) for the foreign currencies, before buying from the farmer in America or the Vineyard owner in France. If one purchaser, say the grocer in France, has dollars leftover, the grocer has choices; save the money, invest the money, exchange the money for euros or another currency, or exchange it for more American goods. Should the exchange option be taken, then the new owner of the dollars will have the same four choices. In the case of purchasing, America gets its dollars back. In the case of investment, it will be only with a company that accepts american dollars; the U.S. would gain more investments from which to maintain or expand the factors of production. If the grocer saved it, then it is still making American dollars more valuable, in which case we should be thanking our foreign customers. Lastly, Pro puts the cart before the horse in the matter of GDP; while it is a measure often used for calculating economic growth, it is only a measure of spending; it is not really a good measure of all "stuff" being produced and focuses far too heavily on consumer spending rather than looking at the stages of production that produces said goods. For an example, consider the greatest leap forward in human welfare, the Agricultural Revolution 10,000 years ago. During that time, many hunter-gatherer societies became agricultural societies, gaining a surplus of food and exploding population wise. If there were a "Gross Domestic Food Production" indicator back then, we would see that the agricultural societies were consuming far more food than the Hunter-Gatherer societies. It would not follow that the sovereigns of the city-states should eat more to boost the economy, though, because it is not eating the food (or spending) that increases real wealth; rather, greater production allows for more consumption. A steady deflation, brought about by the very saving Pro wishes to counter, allows more people to produce with decreasing prices for the factors of production, and does not lead to the mal-investments infaltion encourages. In short, Pro does not have a case, thus her resolution that federal deficits are good for the U.S. economy should not pass. I await Pro"s defense. [1] http://www.bls.gov...