From: thf2@ellis.uchicago.edu (Ted Frank)
Newsgroups: talk.politics.theory,talk.politics.misc
Subject: Re: National debt is not bad
Date: 24 Jan 93 06:23:48 GMT
Reply-To: thf2@midway.uchicago.edu
Organization: University of Chicago

In article <1jtb0gINNmfk@usenet.INS.CWRU.Edu> an030@cleveland.Freenet.Edu (Broward Horne) writes:
>>Of course they are.  What are they supposed to do, leave the money in a
>>vault?  Why not invest it in T-bills, which is what it comes out to
>>this way.
>    
>       Hmmm. Maybe "invest" it in low-risk companies, rather than 
>       welfare programs?  Nayyyy.

I thought you were just complaining how the government is spending poorly.
Why should the government borrow money to invest in low-risk companies
when private investors have the incentive to do so already?  (Investors
*don't* have the incentive to build infrastructure *and* charge marginal
cost for the use of the infrastructure, which is when we need government.)

>>>>which made revenues go down as the economy shrank, which led to more cuts,
>>>>which ...
>
>      Oh, now *this* is pure bullshit.  In all previous recessions,
>      governments had followed the EXACT same policies.

I have no idea what you're talking about, because you're certainly not
talking about any planet I've lived on.  There's a huge difference
between how governments of today handle recessions and how governments
of a century ago handled them.

>>You got cause and effect mixed up.  *Because* of government stimulus, there
>>is no comparison between now and the Great Depression.  The various
>>safety nets prevent a complete collapse of the economy if there's some
>>shrinkage. 
>>
>>If the economy shrinks, (1) tax revenues go down and (2) unemployment,
>>and therefore unemployment benefits paid out by government, go up.  
>>Presumably, poverty also increases, so those welfare payments increase.
>>Decreased revenues and increased spending equals more deficit.  By
>>definition.  If there were a balanced budget amendment, every time
>>there was a recession, there would have to be increased cuts in government
>>spending and increased taxes, which would worsen the recession, which
>>would lead to increased taxes and spending cuts, which would ad
>>infinitum...
>
>      Hmmm.   How odd that this never happened in previous recessions,
>      Interesting, but bogus.

Big surprise that it "never happened" -- there's never been a balanced
budget amendment.

>>>>I think it's even more dangerous to exaggerate the problem of the debt,...
>
>       Yes, yes, ignore it.  Look, you BUILD a case against yourself.
>       If it's so fragile it can't be talked about, then there is 
>       a problem.

You're reading too much in -- where do I say "don't talk about the debt"?

If the problem is "A" it does us no good to pretend the problem is "B."

>>Others have called for a balanced budget come hell or high water.  I'd
>>prefer a look at the underlying economic issues rather than a simpleminded
>>approach of "balance the budget because deficit is bad".
>
>      Well, then, CHUM, you better get out there and start educating
>      our foreign holders of debt, institutions, etc, hadnt' you?

They are educated.  Which is why they're not panicking, and you are.
Uneducated investors get their heads handed to them in the market.

>       Building an economic tower of babylon, depending on arcane and
>       possibly incorrect theories, dependent on ALL users to 
>       have full in-depth technical knowledge is pure folly.
>
>      Even as user-friendliness, ease of use, etc are being taught
>      to new generations, we have an economic cadre of black-magic,
>      determined to collapse.

You really take pride in wallowing in ignorance, don't you?
-- 
ted frank                     | thf2@ellis.uchicago.edu 
standard disclaimers          | void where prohibited
the university of chicago law school, chicago, illinois 60637
Newsgroups: talk.politics.theory,talk.abortion