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  1. #171
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    That does not negatively affect the economy, it positively affects it, but it's extremely slow.
    This is the exact opposite I've heard, from several places. the extra spending over taxes improves the economy over the short term, but the large amount of debt tends to make loans harder to get over time, which slows down growth.

    Inflation causes the currency to be worthless, which has nothing to do with the federal government's current account balance.
    In terms of currency exachange, a large deficit with no return investment would be expected to reduce dollar values vs. other money types, which over time would be expected to cause some inflation at home.

    What I am about to say will be inflamatory on many levels, but I don't know how to sugar-coat it. Admittedly, it is simply my opinion, and I have little factual basis for it (though I think I have support for many individual points). It simply make sense to me.

    1) Technology and new business models (in short, new ways of doing things) is what creates growth.
    2) Open environmetns, with open minds are more conducive to new ways of doing things.
    3) George Bush's administration created a very closed, and closed-minded environment in the U.S.

    Our economy is barely growing, because we are all essentially doing things in the same ways (technologically, and economically speaking) now as we were in 2000 when Bush took office, despite that fact that we were hitting limits, getting diminishing returns, and otherwise in sore need of innovation.

    Innovation in itself causes problems, but those are the problems and corrections of a growing economy. What we have here is near stagnation.
    Have you seen this directly (out of curiosity)? most bits and pieces of this post do seem to be true, and I see Bush+other leaders over the past few years as causing future problems by not pushing innovation, but some of the connections above seem a bit iffy.

  2. #172
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    Also, with the mod hat on: Do not attack the person, attack the idea. You (in the general sense) can make whatever point you want to make without calling the other person an idiot (in all the forms it takes). This is especially true if you are just stating an opinion, or are not backing up what you are saying.

  3. #173
    Blah Orangey's Avatar
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    Quote Originally Posted by Wolf View Post
    Inflation causes the currency to be worthless, which has nothing to do with the federal government's current account balance. Go talk to Bernanke if you're worried about inflation, because they're the ones driving it.
    Well, deficit spending while the economy is at full production can cause demand-pull inflation.
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  4. #174
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    Quote Originally Posted by Zergling View Post
    This is the exact opposite I've heard, from several places. the extra spending over taxes improves the economy over the short term, but the large amount of debt tends to make loans harder to get over time, which slows down growth.
    No relationship between the two. It could eventually reduce the credit rating of the federal government and keep it from taking loans, but our percentage of debt to GDP is lower than most first world countries. We could entirely wipe out our debt in a couple years if we cut out all the wasteful spending the federal government engages in both here and abroad, while still maintaining our presence in Iraq (which costs very little in comparison to our other senseless spending).

    In terms of currency exachange, a large deficit with no return investment would be expected to reduce dollar values vs. other money types, which over time would be expected to cause some inflation at home.
    I think you have two deficits mixed up. Trade deficits are not budget deficits, and trade deficits started growing rapidly during the Clinton administration.

    Quote Originally Posted by Orangey View Post
    Well, deficit spending while the economy is at full production can cause demand-pull inflation.
    True, but unlikely in this case. Inflation at the moment is most likely related to market bubbles and trade deficits that are finally catching up with us.
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    Disclaimer: The above is my opinion and mine alone, it does not mean I cannot change my mind, nor does it guarantee that my comments are related to any deep-seated convictions. Take everything I say with a whole snowplow worth of salt and call me in the morning, if you can.

  5. #175
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    Quote Originally Posted by Wolf View Post
    No relationship between the two. It could eventually reduce the credit rating of the federal government and keep it from taking loans, but our percentage of debt to GDP is lower than most first world countries. We could entirely wipe out our debt in a couple years if we cut out all the wasteful spending the federal government engages in both here and abroad, while still maintaining our presence in Iraq (which costs very little in comparison to our other senseless spending).


    I think you have two deficits mixed up. Trade deficits are not budget deficits, and trade deficits started growing rapidly during the Clinton administration.
    On both of these, I have heard of the connections (college economics), so there is no confusion. Where are you getting your information?

  6. #176
    Senior Member Lateralus's Avatar
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    I've never understood why people consider trade deficits to be a bad thing.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  7. #177
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    Quote Originally Posted by Lateralus View Post
    I've never understood why people consider trade deficits to be a bad thing.
    They're only bad if they don't equalize, which they will do.

    Some of ours are artificial due to currencies that are not controlled by market pressures.
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    Disclaimer: The above is my opinion and mine alone, it does not mean I cannot change my mind, nor does it guarantee that my comments are related to any deep-seated convictions. Take everything I say with a whole snowplow worth of salt and call me in the morning, if you can.

  8. #178
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Wolf View Post
    They're only bad if they don't equalize, which they will do.

    Some of ours are artificial due to currencies that are not controlled by market pressures.
    Yes, that's true about currencies not being controlled by the market (like China). The value of the dollar should have been falling vs yuan, but it hasn't been because it's been tied directly to the dollar.

    I wasn't being completely clear with my last statement, what I actually mean is that I believe people who think trade deficits are arbitrarily bad are not adequately informed on the subject.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  9. #179
    ^He pronks, too! Magic Poriferan's Avatar
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    Ugh... I'm not in the mood to get into another long debate about economics.
    I felt like my final explanation of the zero-sum theory was plenty enough work, and you never even responded to it Lateralus. In fact, you have a tendency to not respond to the points and questions I find most compelling, and I can't help but wonder if that's not a coincidence.

    And Wolf... Well, need I say more on this forum?

    I am truly baffled that you believe a country could have a large defecit, held at once in budget and trade, would not negatively effect a country's economy, but it's very complicated, and I've had my share of this stuff.

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  10. #180
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    Quote Originally Posted by Magic Poriferan View Post
    I am truly baffled that you believe a country could have a large defecit, held at once in budget and trade, would not negatively effect a country's economy, but it's very complicated, and I've had my share of this stuff.
    Wait...a budget deficit only negatively affects the economy if it results in inflation. Deficit spending will only result in inflation if (1) there is no return on the investment or (2) no return on the investment is possible because the supply can't meet the demand created by the increased spending (e.g. the economy is at full production capacity). When we are in recession, deficit spending increases output and productivity. So budget deficits are not bad outright.
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