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Kasz216 on 30 April 2013
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Kasz216 said:

I think that's more or less a false narrative though when our GDP to debt ratio has constantly increased.  Even before the financial crisis.

 

and again, i'd point out... Demand side economics says that tax cuts are equal to stimulus spending.  So raising taxes would be just a negative an action as an equal amount of austerity.

Stimulus spending = The Bush tax cuts. (Per Keynes, well not the Bush tax cuts, but tax cuts.)

They should have the exact same effect.  Someone who thinks the Bush tax cuts didn't work should also think stimulus spending won't work

Taxes was not the real point of my arguement other than the economy did fine under the Clinton era tax rates and it helps with the deficit.  In theory that point should be correct, I just don't think its what we see in the real world.

A runaway deficit  that continues to grow its GDP to debt ratio is bad but we are not in the financial trouble many would make you believe.  The mass spending is due to the reccession and couple wars, and in my opinion the spending in case of the recession was needed to keep us a float.  

My point of being able to borrow money at a rate that we will easily be able to pay back as long as the estimation for GDP growth is correct shows how misleading it is when people compare public and private debt.  A long with the fact that even if we reach a high GDP to debt ratio it now shows that it does not seem to impede economic growth.   So much of the rhetoric we hear is simply false or misleading.

Again though.. I showed why that wasn't the case, and a pointless arguement.

I mean, debt vs gdp isn't different from public and private debt.

For example.  It's why you get a Home Morgatge.

Your borrowing money... at interest, but what you save on rent, and the equity of the house makes it a good purchase.

 

Debt to GDP ratio's effecting growth really are relative to the size of the credit market you have... more importantly, the domestic credit market.  Again, if we were to look at Keynes.  He'd be HORRIFIED just how much of our creditors were foreign.   I doubt very much he'd actually want us to sell bonds and instead just fire up the printing press for EVERYTHING.

 

If you want to view WW2 as a success from a Keysnian perspective.  War Bonds play a huge part.  (Which... was Keynes idea FYI...)

You can't stay afloat in a leaky boat, and to try to before fixing the holes is madness.  This was the real heart of Keynes message.   One that was lost due to the fact that it wasn't really relevent to the powerful countries at the time.

 

This is why... desptie being cast as opposites.  Keynes and Hayek were great friends... and saw themselves as believing 98% the exact same thing.