The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Macro Economic Trends and Risks


Subject:  Re: Here's your chance: Balance the Fed budget Date:  1/2/2007  3:55 AM
Author:  capitanfracassa Number:  200135 of 606097

How can this be???? A healthy government that is spending less than it makes "CAUSES" a recession? What crack is being smoked, and who's not sharing it?!?!?!!

I think the crack that's being smocked is called the greenback, and you know very well who's not sharing it ;-)

The comment is a little cryptic but very right. Every dollar the goverment spends ends up in a pocket. The services the government buys are supplied by businesses that employ millions. The transfer payments go to non-working citizens and are immediately exchanged for goods and services provided by yet more businesses. The interest payments float the financial industry, which pays the best salaries with it and accounts for about a quarter of the overall consumption.

Any cut in spending will result in lost profits, either directly if you cut the pork, or indirectly if you cut the transfers. Businesses will cut back and there will be a recession.

It's better not to be addicted to crack, but once you are, cold turkey may not be the smarter course of action. Unless the sight of long, long lines behind soup kitchens and national guardsmen fighting their way through barricaded cities is your idea of "a healthy government."

Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us