(10-09-2013, 01:22 AM)kandrathe Wrote: If spending oodles of money we don't have is sooo tremendous, then why not everyone? Why not borrow a million each, and go out on a huge spending spree? Why don't we just let the government print up 100 trillion dollars, and let them go spend it? Why are we dabbling in excessive spending?
Because the output gap is about $2 trillion, not $100 trillion. The first $2 trillion gets aggregate demand back up to where it was, gets people in jobs. The next $98 trillion is pure inflation. Printing and spending money is inflationary when you're at full capacity. But the $98 trillion is not an excuse for not spending the $2 trillion.
Why not get the private sector to do it? That would be great, a better solution than government doing it. Would you like to call them up and tell them to borrow and spend? Because right now, the government is threatening to default on the largest safe asset on their balance sheets, which is having exactly the opposite effect. They aren't going to, so the government has to.
Or, you could just throw away the output, let your workers' skills deteriorate, let people fall off the social ladder. That also works.
-Jester