-Another reason deficits are necessary

An alternative to popular faith

Here is one of the many reasons federal deficit spending is absolutely necessary — even more so, now — and why trying to reduce the deficit is dangerous and imprudent.

Note how debt growth declines before recessions and increases to cure recessions

Source: Joe Weisenthal and Kamelia Angelova, Clusterstock – Business Insider, September 9, 2009

Economic growth requires spending by consumers, businesses, local governments and the federal government. When consumers aren’t spending, businesses also spend less. The federal government must spend even more to take up the slack.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com

3 thoughts on “-Another reason deficits are necessary

  1. You are right. In the current system, personal debt is the only thing that keeps our economy afloat. What I am saying is let the other guy go in debt for the sake of the economy. I am going to stay away from debt. Continuous consumption of personal debt is not sustainable. Maybe it is time to move to a system that doesn’t rely on convincing more people to take out more personal loans to ensure prosperity for the whole?

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  2. Agreed, BDO.
    The system would be for the government to add the needed money, and not need to rely so much on the consumer. The government is the only entity that easily can support debt and not worry about bankruptcy.

    Rodger Malcolm Mitchell

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  3. It appears that we actually have a dollar SHORTAGE, and our economy and society is suffering because of this.

    Where do dollars come from? The federal government or private businesses? Dollars come from the federal government – It’s incredible that people do not understand this simple concept. These dollars have to be put into the economy to begin with by the government using our monetary sovereign system – people never seem to think about where dollars come from.

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