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blackice
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Canada where else...
Sep 2000
time: 00:29
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Good points Odin, but should have read gains went to the wealthy. Mind you a major reduction in the inflation such as that did help ease the burden of the poor.
Kidicious What caused the deficit, spending or tax cuts?
There are many ways to measure the impact of the debt on the U.S. economy, and they come to the same conclusion: the impact is small. During the 12-year Reagan-Bush era, the debt climbed by about $3 trillion, or approximately half of 1992's GDP. If Government had not borrowed this money, private enterprise could have invested it and made us richer. But how much richer is a disappointment. The real rate of return on private investment is about 6 percent a year. Six percent times half of the GDP is 3 percent. So the U.S. would have been only 3 percent richer after 12 years of balanced budgets. Some argue that the drag on the economy might be even less than that, since the U.S. has almost always run a deficit since World War II, and comparisons to a completely balanced budget are not realistic. Also, much of the debt was financed with foreign capital at lower rates of return, which mitigates the corresponding loss of private investment. So an estimate of 3 percent is actually on the high end.
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Kidicious
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Diety of Kidiverse
Mar 2003
time: 21:29
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quote:
Originally posted by blackice
Kidicious What caused the deficit, spending or tax cuts?
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Both are injections and both tend to cause inflation, although I think spending tends to be more of a cause.
quote:
Originally posted by blackice
There are many ways to measure the impact of the debt on the U.S. economy, and they come to the same conclusion: the impact is small. During the 12-year Reagan-Bush era, the debt climbed by about $3 trillion, or approximately half of 1992's GDP. If Government had not borrowed this money, private enterprise could have invested it and made us richer. But how much richer is a disappointment. The real rate of return on private investment is about 6 percent a year. Six percent times half of the GDP is 3 percent. So the U.S. would have been only 3 percent richer after 12 years of balanced budgets. Some argue that the drag on the economy might be even less than that, since the U.S. has almost always run a deficit since World War II, and comparisons to a completely balanced budget are not realistic. Also, much of the debt was financed with foreign capital at lower rates of return, which mitigates the corresponding loss of private investment. So an estimate of 3 percent is actually on the high end. |
You can't say for sure that the deficits crowded out private investment. Reagan sure didn't plan it that way. According to theory deficits eventually cause inflation. My point is that the fed took care of inflation by raising rates even before Reagan took office. It was Chairman Paul Volker, and he slammed the brakes on the economy in 1979.
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13-07-2003 09:11
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considering the US built more nukes during the Reagan admin than all other previous admin's combined... 
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