My prediction: next generation will be smaller than the current

[SamuelRSmith]

9009pc said:

SamuelRSmith said:

9009pc said:

well in britian if things continue they way they are that is difinate, the rest of the world we need to see if all these stimulus packages work.

Stimulus packages just delay the inevitable... except they drag the inevitable out, and make it worse. Which will all start to come into fruition in the next generation. The UK is starting to see the effects now, because the Government are starting to cut now, meaning that we feel the pain now, rather than later... in the end, that is the best way to be.

I am not overly knowlegeable about this but this is what i think i know.

A well planed stimulus package should theoritically pay for it self by improving the infrastucture of a country and increasing the amount of sustainable jobs. along with a carefully planed time scale for the payback.  the problem is getting a well planed package. any problem could have serious consequences to the state of the economy. two major problems to this are the rising price of fuel and a aging population, then there is also trying to face other problems like global warming.

cutting the support and service and rising the taxes is difinately going to have an impact on peoples way of life decreasing there spending and shrinking the economy.  the silver lining is when you have paid it of you don't have to pay interest rates to the people you were indebted to. you should be able to run a surplus and pay for all these things from a stronger position, going back into debt if necessary.

it all on depends upon how you like to handle your debt some like me would prefere not to have it so they will try and clear it quicker some like to pay it back without having to make major decision about what to do without. others don't see what is wrong with having a debt as long as you can pay the interest and manage it. things are bad now but the way everything is geared it sames like it is only going to get worse over the next couple of decades and I would rather we were in as strong a position as posible to deal with it. the economy is only one aspect and the PM seems to know this with his big society idea, and protecting the science sector.

like I said at the start I don't really know what I am talking about so please help me if I got it wrong.

regardless the only country I would difinately say the next generation will be smaller is britian though overall you are probably right.

Indeed, a "stimulus" package spent on building infrastructure, etc, can, over the decades, pay for itself through the increase in economic activity as a result of the project. HOWEVER, with the Government, whether or not they target the right areas to develop is very much hit and miss - and the more developed an area is, the more likely the Government is likely to miss. A road in a developing country, for example, can connect two major towns, allowing for whole new levels of trade to occur. A new road in the developed world, on the other hand, will likely just serve to reduce congestion slightly for a couple of years. Governments may also completely invest in the wrong areas of infrastructure: say, working to provide the country with a 2mb broadband line, when selling the spectrum for 4G will allow for far more people to get a much more powerful connection, at much less the cost... without any spending from the Government at all (indeed, selling the spectrum will actually bring some money in for the Gov't)

Further still, stimulus doesn't just go towards building infrastructure. It goes towards bailing out General Motors, towards funding house purchases, towards buying new cars. These areas of stimulus are NEVER good for the broader economy, as these things are always best left to the markets.

And, finally, when the Government is providing these stimuli - which has a very low chance of being a well-invested infrastructure project - they always do it by borrowing the money. This is bad. I'm not going to go through the whole process, now, but it's because of the Government running deficits that inflation exists at all. Inflation was pretty much non-existant in the USA before the 20th century... because the Government never ran any deficits. It was only with the outbreaks of the World Wars, when the Government started running permenant deficits for the first time, and the moving off the gold standard (which allowed free printing of money, and, thus, even larger deficits) that inflation really started to kick off.

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As for your last point... the UK isn't the only country running through austerity measures - at the moment, you're seeing Spain, Portugal, UK, Ireland, Greece going through it all. France and Germany will need to start in a big way in the next couple of years... Japan shortly after. I don't know if you're aware, but the Republican party proposed a budget with $6.2 trillion's worth of budget cuts over the coming years in the USA... so, austerity will probably be starting in the USA within the next two years, and definitely after the 2012 elections.