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Originally Posted by Jaxian  Understand that creating a deficit does not negatively affect the economy immediately. It takes a large amount of time for the deficit to begin its negative effects.
Reagan and Bush Sr spent a lot of money. When they did this, the economy was improved in the short-term, because all of the money they spent was going into the economy. But the economy suffered in the long term because future governments have to actually pay off that debt.
Going into debt is a good method of mitigating a recession. However, we shouldn't be increasing our debt when we're not in a recession. That causes problems for the economy later on. Bush might be looking at an economy on the upswing, but he needs to consider the consequences of spending too much. | You're wrong on many counts...
First of all, Reagan took office after the HUGE mess Carter left: 20% inflation and most operating loans were at least 18%.
Reaganomics worked because they removed the overwhelming tax burden on American businesses. Less income, in the short-term, was happening while the American economy was rebounding. As the economy began to boom, tax income began coming in at record rates. It took time.
Can you begin to understand basic economics?
Let me make it very, very simple: If I spend $3,000 to buy a good mower, to go into the mowing business, my immediate bottom line looks VERY bad. I'm $3,000 in debt! However, if using that $3,000 mower enables me to make $10,000 per year, the initial $3,000 debt is not a bad deal, is it? Of course, the "bottom line" does not turn around IMMEDIATELY.
Can you begin to understand this? |