Originally posted by Kunsoo
In 1937, politics and an aggressive Republican campaign caused FDR to "compromise" and cut spending. For the first time since he became President in 1937, the GDP declined, unemployment increased, and basically the economy sank until FDR resumed the Keynesian policies, gradually climbing out of the Depression.
Well, with this deal pulling massive amounts ...[text shortened]... 2Fd80222d6-bcfb-11e0-bdb1-00144feabdc0.html&_i_referer=http%3A%2F%2Ftalkingpointsmemo.com%2F
Admittedly I don't have much macro-economics training. I bought one book from the bookstore, the only book the Barnes and Noble had. Clearly, Americans in general are not buying a lot of books on Macro-economics, although everyone seems confident they know exactly how a country prospers.
But I'm inclined to fall back on basic horse sense. If a country spends more than it takes in, it doesn't seem like that can last. If I ran my own budget that way, I'd have some very happy kids, but there'd be a lot of grief somewhere down the road.
Maybe I'm missing something. 70 million macro economic experts that voted for Obama can't be wrong. They all agree that Bush didn't tax enough and the resulting deficit nearly ruined us. Now Obama is forced to run a bigger deficit to fix us. That must be obvious to those of you with extensive macro economic training, but for me, it hasn't quite clicked yet. It seems like that if our solutions were as simple as the government spending more, then every country would be prosperous and no country in history would have collapsed. Zimbabwe would be doing fine. If the only hard part was to find a way to spend more, what could be easier than that?
Sometimes truth is counter-intuitive, but here are some things I would think would be obvious:
1. A government must spend no more than what it takes in over the long term in order to be economically secure.
2. A government can only tax a certain amount before destroying productivity. No one is going to work hard just to they can turn over their gains to be spent at the discretion of the government, elected or not.
3. You don't create wealth by creating "money". The government could easily create enough money to make every man, woman, and child in the country a billionaire. But no one will be rich because of it. If everyone is wealthy, no one has to work. If no one is working, then no one is making cars, airplanes, or even growing food. The end result would be that even billionaires would have to grow their own food just to avoid starvation.