The idea is that the time to reduce the budget deficit is when the economy has recovered. The President tried to do this but gave up under TeaPartyRepublican pressure. Until the economy begins to boom, a stimilus is in order. And as far as the Right's "solution" of a balanced budget ammendment, is concerned, there appears to be only one acutally operating in the world. It is in Argentina where their one-time dictator actually managed to impose on the politicians a brilliant economic plan. It goes like this: when business is booming, taxes rise and a surplus acccumulates in the Treasury. When the bubble bursts and the economy slumps, there are the funds the governemtn needs on hand to stimulate the economy. The trick is to have an annual projection so that it is known how much money is to be saved when business booms and how much spent when it slumps. A commission sets that ahead of time. The commission is not made up of politicians but economics, legal and administrative experts.Please Register or Log in to view the hidden image!
In Keynesian economics you are supposed to run deficits to stimulate the economy during economic busts or the bad side of the business cycle. In Keynesian economics you are supposed to pay off the borrowing that happened during the economic bad years buy running surpluses during the good years. Other than a few years under Clinton the US government has been running deficits in both good years and bad years. That is not Keynesian economics. Keynesian economics is good and does work. But what if the bad years are going to last 15 years? I don't know Keynes would advise running deficits if he thought the bad years would go on for a very long time. If the bad years go on for a very long time then they are not the bad years, they are the new normal baseline even though when compared to the old normal baseline they appear to be bad years. Obama thinks this is a bad year and therefore he should deficit spend to create Keynesian stimulation. I think this year is the new normal and we won't have years much better than this for the next 20 years. If am right and this is the new normal then deficit spending is not appropriate. I predict twenty years of economic trouble ahead for the USA. Obama and most economic prognosticators don't agree with me but I bet I am right and all those people are wrong. Those people did not see the housing bubble coming but I did. I rely on basic macroeconomics; they rely on the opinions of supposed experts. Even when I was studying economics I would not simply believe what my professors and textbooks said. I had to make intellectual models and mathematically test what I was being taught because I am a knee jerk skeptic. I tested Keynesian economics and it is valid and true. The benefit at times of Keynesian stimulus is because businesses won't expand, hire, take risks when they perceive weak demand and with businesses holding back that further weakens demand. A lot of economics is more psychological than mathematical. In my opinion most of these supposed experts are just relying on each others opinions which means Obama and most economic prognosticators are relying on an echo chamber to form their opinions.
