[Pitchfork]

The ecomomy is not 'tied directly to the federal budget' but to think that fiscal policy is irrelevant is folly. When the goverment runs a deficit it competes with the private sector for investment dollars because it has to borrow money to pay its bills. Fortunately the US economy isn't a closed system, so capital can flow in to fill both needs in most cases. Unfortunately the largest current buyers of US securities are the Chinese. I'll leave you to consider the impact of that fact.

[nopardons]

Are you that far gone ? There was a HUGED and constantly growing deficit under Reagan during the BOOM years of the'80s !

You're using a bulldozer to dig that hole now; I guess the shovel wasn't fast enough.

[Fledermaus]

The ecomomy is not 'tied directly to the federal budget' but to think that fiscal policy is irrelevant is folly. When the goverment runs a deficit it competes with the private sector for investment dollars because it has to borrow money to pay its bills. Fortunately the US economy isn't a closed system, so capital can flow in to fill both needs in most cases. Unfortunately the largest current buyers of US securities are the Chinese. I'll leave you to consider the impact of that fact.

The "when the govt runs a defict it competes with the private sector for investment" is and has been a lie for decades. It's not provable beyond any measure of "competing for capital". First, the government's deficits are held in long term bonds. They used to be 30 years bonds with very low interest rates until Rubin cancelled them and switched to 10-15 year bonds with slightly higher rates. But in either case, this has NO EFFECT on private sector borrowing since there IS NOT one giant pie of captial investment where one dollar to government is one less to the private sector like a zero-sum game.

The tax rates and financed deficits are factored into the Federal Reserve interest rate decisions. Now, given the govt borrowing as you maintain, then under the higher deficits of the early Reagan administration it would have been impossible for all interest rates to get lower. The fact the deficits grew as a percentage of GDP and the interest rates (prime, mortgatge, consumer debt) were lowered disproves your contention on it's face.

As to your next statement, yes...the US is open to foreign investment. But your facts are skewed when you state it's the Chinese that are the largest "buyers" of US securities "currently". Yes, "currently", they are. But the largest HOLDERS of US Securities, i.e. long term bond debt, are still Great Britain, Japan, Canada and other countries that are our allies. China could continue their "current buying" trend for decades and never get close to those countries in security ownership.

And what's wrong with that? You, I'll bet money on, think that is a weakness we have...oh no, China will call in it's debt! Many see it as our strength, they won't want to harm their investment and thus are more apt to want our continued growth.