axt113 said:
HappySqurriel said:
| axt113 said:
The transfer of goods and services and money is only part of what economics is.
And government spending isn't short term much of government spending occurs over the long term, which is why we tend to have deficits for many years in a row, because the spending is at similar levels every year.
It'll only collapse at a point where there is no one to buy the debt or their demands for buying the debt become too high, we are no where near that point, right now, our debt is bought up readily.
Actually globalization hasn't just been a flow of money out of the US, a lot has come into the US, the problem has been for lower and middle skilled workers in the US, who have suffered due to the competition from workers in other countries who have workers of similar skill willing to work for far less. They have suffered as a result of globalization, but that is expected.
I understand where you're coming from, but your fears are overblown, right now, government spending is a necessity, and we still have a good deal of time left to address the debt. Priorities, first recovery, then the debt.
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There are only two reasons the US bond market continues to operate at its current level, investors are concerned about equities and are fleeing to "Safe" investments, and Chinese currency manipulation leaves China with billions of excess American dollars to invest which find their way to the bond market. Any significant shock to the perceived safety of government debt (say the inevitable default of several countries and states) will drive further investment into assets that have real value (precious metals, commodities, real-estate). To make matters worse, any change to the exchange rate in China will also cause a significant shock to the bond market; which means that if America allows China to maintain currency manipulation they will continue to bleed jobs, and if the currency manipulation stops Americans will face higher inflation and/or interest rates.
Or to put it another way, decades of government deficits have created an environment where any action by the federal government will (likely) cause more pain for the American economy. The solution to too much deficit spending and too high of debts is not to increase the size of the deficit and the debt load to buy an additional 6 months of "good times". Effectively that strategy is like paying the mortgage on the house you clearly can’t afford by putting it on your credit card and claiming that your financial problems have been solved.
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The thing is, its not going to happen, China is going to continue to have billions to invest for quite some time, as do other countries which are buying our debt, and government debt is still considered extremely safe, it'll be quite some many years, before we have to worry about that.
As for the bleeding of low skilled jobs, its not just China, but dozens of countries which are competing with the US for those jobs, going after China won't stem the tide, this was inevitable.
The problem right now is not high debt and deficit, so your argument is flawed, the problem is the economic downturn, the only solution at the moment is to maintain deficit spending until the economy reaches a point where it can sustain itself, then to begin pulling back spending. The Debt and Deficit are more long term problems, we should keep an eye on certainly, but trying to solve that will only prevent us from dealing with the current ongoing problem.
You're worried about something that isn't really a problem at the moment and ignoring the thing that is the problem right now.
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