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View Diary: Bernanke Calls Congress Biggest Obstacle to Economic Growth (31 comments)

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  •  Double-Edged Sword (4+ / 0-)

    While growth has slowed from the spending cuts and tax increases (Bernanke gave them both equal time, I was listening live), the fiscal restraints (ie austerity) has also brought us closer to a balanced budget.  With payments from the Federal Reserve to the Treasury this year likely to surpass last year's $77 billion payment and the continued payments of Fannie/Freddie (none of which are counted in CBO estimates I believe), it is quite possible that the budget will show balance/surplus by 2015.  That, my friends. is the holy grail anti-republican argument and could arrive just in time for 2016.

    •  The balanced budget is a gimmick. (1+ / 0-)
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      hyperstation

      Also, it's nicely alliterative.
      There is no point in an issuing entity sending out just as much currency as they expect to come back in,especially when the revenue structure hasn't been set up to do that.
      Since the revenue structure has been set to capture currency that's moving through the economy, one main reason revenue is down is because the velocity of the dollar has slowed to rates not seen since they started keeping track in the fifties. Why is money as slow as molasses? Well, one reason is that what moves around Wall Street doesn't count.
      It would if each transaction were tapped for a tiny tax. Indeed, we could fund all public functions at all levels with a transaction tax of one half of one percent. But then Congress wouldn't be able to use dollars to reward and punish the electorate.

      We organize governments to deliver services and prevent abuse.

      by hannah on Wed Jul 17, 2013 at 11:33:37 AM PDT

      [ Parent ]

    •  Not so sure... (1+ / 0-)
      Recommended by:
      TomP

      That's fine as far as it goes but I would rather have a scenario where there was a moderate deficit and unemployment was under 6.5%.

      Even though people may complain about government spending and deficits they don't really judge their overall economic well-being by it. People are more likely to judge 'The Economy' by how secure their job is or how easily they could find a new or different job.

      Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

      by Joe Bob on Wed Jul 17, 2013 at 11:35:22 AM PDT

      [ Parent ]

      •  I am not advocating a balanced budget (2+ / 0-)
        Recommended by:
        Deep Texan, artmartin

        personally, as I think a balanced budget can lead to severe market dislocations when you are the world's reserve currency/market.  

        What I am saying is that politically, a balanced budget/surplus is likely far more powerful than a couple of extra tenths of a point on GDP or off the unemployment rate.  

        •  agreed (1+ / 0-)
          Recommended by:
          artmartin

          it means debt pressure is relieved a bit.  which changes things.

          -You want to change the system, run for office.

          by Deep Texan on Wed Jul 17, 2013 at 11:47:20 AM PDT

          [ Parent ]

        •  GOP strategy is to max out the credit card when .. (0+ / 0-)

          ... they are in office and whine about debt when they are out of office.  Recall Dick Cheney saying that deficits don't matter when he and Bush were in the White House.  Here is a graph of debt by president.

          But it's worse than that.  Every time we've run a surplus, there has been an immediate recession, except for the Clinton surpluses, which preceded our current fiasco by a few years.   Per L. Randall Wray:

          [...]

          2. With one brief exception, the federal government has been in debt every year since 1776. In January 1835, for the first and only time in U.S. history, the public debt was retired, and a budget surplus was maintained for the next two years in order to accumulate what Treasury Secretary Levi Woodbury called “a fund to meet future deficits.” In 1837 the economy collapsed into a deep depression that drove the budget into deficit, and the federal government has been in debt ever since. Since 1776 there have been exactly seven periods of substantial budget surpluses and significant reduction of the debt. From 1817 to 1821 the national debt fell by 29 percent; from 1823 to 1836 it was eliminated (Jackson’s efforts); from 1852 to 1857 it fell by 59 percent, from 1867 to 1873 by 27 percent, from 1880 to 1893 by more than 50 percent, and from 1920 to 1930 by about a third. Of course, the last time we ran a budget surplus was during the Clinton years. I do not know any household that has been able to run budget deficits for approximately 190 out of the past 230-odd years, and to accumulate debt virtually nonstop since 1837.

          3. The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929. (Do you see any pattern? Take a look at the dates listed above.) With the exception of the Clinton surpluses, every significant reduction of the outstanding debt has been followed by a depression, and every depression has been preceded by significant debt reduction. The Clinton surplus was followed by the Bush recession, a speculative euphoria, and then the collapse in which we now find ourselves. The jury is still out on whether we might manage to work this up to yet another great depression. While we cannot rule out coincidences, seven surpluses followed by six and a half depressions (with some possibility for making it the perfect seven) should raise some eyebrows.

          [...]

          Surpluses and balanced budgets are deadly in terms of economic growth.  IMHO, the government should print and spend all the money it can without causing inflation.

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