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Great Advice...
Unless.. Everyone in the economy tries to follow it Paradox of Thrift Paradox of Deleveraging
I+G+X
Saving
Investment
Taxes
Government Spending
S+T+M
Imports
Exports
Continued...
There is a ne line between solvency and insolvency Once the debt gets too high, creditors will grow weary They may downgrade your credit rating, and your borrowing costs may spike You could end up like Greece (i.e. unable to pay your bills)
http://www.stlouisfed.org/publications/re/articles/?id=2157
[A] government cannot become insolvent with respect to obligations in its own currency. A at money system, like the ones we have today, can produce such claims without limit
~Alan Greenspan, 1997
"I'll wash Mitch McConnell's car. I'll walk John Boehner's dog." ~President Obama
CB&PP
Government
$$$
Non-Government
Their Decit is Our Surplus! or Their red ink is Our black ink!
Fiscally Responsible?
FY2013 decit is down to $680bn 4.1% of GDP 38% drop from 2012 48% drop from 2009
Government Decit
When government goes "down"
A Common Reaction
Understandable! Pervasive distrust of government Afraid of what might happen if they discover they have this power
Hyperination
By looking down the list you can see what isnt there and, strikingly, what you dont see are any instances of central banks gone mad in otherwise-productive economies. hyperinflation is caused by many things, such as losing a war, or regime collapse, or a massive drop in domestic production. But one thing is clear: its not caused by technocrats going mad or bad.
~Felix Salmon, Reuters
http://blogs.reuters.com/felix-salmon/2012/09/03/why-you-wont-nd-hyperination-in-democracies/
Especially Oil
And, of course, private banks have a license to printand they do most of the printing
China
What if China wont buy our bonds? Net exporters to US Results in checking account at Fed Treasuries are savings accounts at the Fed We benet in real terms
Greece
Same debt levels were sustainable when they had sovereign currency
Useful Projects
"Companies are awash with cash. And what they've been missing are enough customers out there to prompt demand and justify them investing in more plant and equipment." ~President Obama
To Get to a Balanced Economy, We Need A Better Understanding of How Money, Decits and Debt Really Work
Thank You!
@StephanieKelton