The Federal Budget is NOT like a Household Budget: Here's Why

Naked Capitalism ^ | 02/11/2010 | L. Randall Wray, a Professor of Economics at the University of Missouri-Kansas City

[aeonspromise]

I would have to ask why is the gvernment bankrupting our country, maybe they should be held to a higher standard, the household..

[henkster]

This one is setting off my BS meter.

[Da Coyote]

Is this writer-clown serious?

Please keep the writer away from real life things, like science, engineering, etc.

Oh, he would make a good global warming expert.

[achilles2000]

Poorly reasoned article.

[WOBBLY BOB]

this is often a good tip-off :
“ ‘Professor’ of Economics “

[Nat Turner]

But only a moron would refuse to accept dollars today on the belief that at some unknown date in the hypothetical and distant future their value might be less than today’s value.

and what moron would give this jack @$$ a degree in economics?!?@?

[SeekAndFind]

Poorly reasoned article.

I posted this article PRECISELY to elicit arguments explaining why his reasoning is flawed. Maybe you'd like to get or keep the ball rolling by critiquing at least one or two of his points.... Thanks.

[sickoflibs]

Krugman is making the same argument, yet when Bush was president and cut taxes he said the much smaller deficits would kill us. Those that want more government support deficits for that and eventual tax increases but not for tax cuts, and vice versa with tax cuts. I bet this guy is for tax increases.

This guy talks like we can avoid recessions forever.

[CholeraJoe]

forbade states from interfering with interstate trade (for example, through taxation),

If I buy an item from Cabela's in Nebraska, my state (Indiana) is going to levy sales tax on that purchase.

[Codeflier]

If this was all true, then the government could spend 100 times what they are now and everything would be better.

[Eagle Eye]

Too educated for his own good?

[SeekAndFind]

But only a moron would refuse to accept dollars today on the belief that at some unknown date in the hypothetical and distant future their value might be less than today’s value.

A wise person would continue to monitor the debt situation and then start HEDGING his investment by diversifying into other currencies. He seems to be calling a lot of investment managers in the USA and government of other countries who are doing this right now ( e.g. China ) morons.

Yes, he's the only bright guy /s

[mgstarr]

Does the learned professor understand that at some point the accumulated debt will have to be paid off and that simply printing additional dollars will devalue the currency?

Typical Keynesian.

[keepitreal]

And here’s reason number 6:

Eventually you can tell your deadbeat son-in-law to get off your couch and go get a job, otherwise he doesn’t eat at your table and can leave your house. You don’t care whether he votes for you.

[Teacher317]

He’s got some minor valid points, but his presentation is just ludicrous. True, no private household lasts for 230 years (although private corporations do), but that does not mean the comparison is invalid. The point is the same: spending more than you take in is a horribly stupid idea in the long term. Putting it in household budget terms helps Joe Sixpack and Sally Seamstress to understand how grotesque the situation is, even though they have literally trillions to spend.

[Lurker]

The United States has also experienced six periods of depression. The depressions began in 1819, 1837, 1857, 1873, 1893, and 1929.

The author missed one.

[KarlInOhio]

The United States has also experienced six periods of depression.

The Great Depression so poisoned the word "depression" that every economic drop since then has been merely called a "recession". It's like saying "passed away" instead of "died". The result is still a burial.

Now with that being said, find any surpluses before the recessions of the last 60 years of the 20th century.

[agere_contra]

But only a moron would refuse to accept dollars today on the belief that at some unknown date in the hypothetical and distant future their value might be less than today’s value. If you have dollars you don’t want, please send them to me.

That's exactly what happens though. People stop accepting worthless currency and ask for hard currency - or gold. Legal Tender laws make this difficult for shopkeepers - but the rest of us will start making dollar-less deals if and when the dollar becomes a wheelbarrow currency.

There is nothing hypothetical or distant about the moment when America's debt service passes its one-year assets. It's what, two years off? The only variable is how mangy the other world economies will look in comparison at that time.

For instance, we in the UK will get to technical sovereign default before the US. And Greece got there ages ago - however they can't devalue their currency - so I imagine that the entire Eurozone will take the hit. And if the Eurozone crashes then the Pound will miraculously become the tallest pygmy in Europe.

[SoDak]

Glad I didn’t go to UMKC for my Econ degree.