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View Diary: Note to Democrats: Social Security and Medicare are as non-negotiable as Obamacare (181 comments)

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  •  Printing too much money is not good fiscal (0+ / 0-)

    policy.  I don't think even Stiglitz or Krugman would recommend this.  Sure deficit spending to jump start an economy is one thing and  I can agree with that,  however a long term plan to use printing money to fix a problem that can easily be fixed by say raising the income cap on SS is not smart IMO.  However I'm not an economist so take that with a grain of salt.

    Right man, right job and right time

    by Ianb007 on Tue Sep 24, 2013 at 02:44:39 PM PDT

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    •  I too would never advocate for printing too (0+ / 0-)

      much money.  But thats really the issue isn't it, how much is too much?.  SS payments to our retirees are not a problem that needs to be fixed.  Its not like people are getting 100K a year.  We are talking about a pretty meager income.  The economy needs the debt free (from the private sector POV) income that the deficit provides each year.  Look at this graph, you will notice that the private sector historically saves about 3% of GDP each year.  The two extended periods of surpluses in the last 100 years came in the mid 1920's and the late 1990's, both periods were followed by the only two depressions since 1920.  Because when private sector debt gets too high, people are forced to deleverage and since private sector debt is a form of money, this shrinks the money supply.  Thats why its healthy and necessary for the Govt to contribute each year to private income, plus we need to make up for the drain in private income that comes from the trade deficit of ~$500 billion each year.  So from a simple accounting POV, if the Private sector wants to net save, the Govt deficit must be bigger than the trade deficit.

      Govt balance = Domestic private balance + Foreign balance

      Every dollar spent by one person or sector is a dollar of income for another person or sector.

      Here's the 3 sector budget balance going back to the 1950's :
      http://soberlook.com/...

      Here's the level of private debt going back to 1900:
      http://static.seekingalpha.com/...

      "The Earth is my country and Science my religion" Christiaan Huygens. Please join our Kos group "Money and Public Purpose". The gold standard ended on August 15, 1971, its time we start acting like it.

      by Auburn Parks on Tue Sep 24, 2013 at 03:02:38 PM PDT

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