Clarification/Follow-up by excon on 10/13/04 9:37 am:

Elliot:

Yeah, yeah, I know he answered over there, but I can't post my clairification over there, so I'm doing it over here. Don't ask me why!


>>>First of all, I need to ask you something. In what way, shape o form does a deficit affect you personally?<<<

The deficit affects me in two distinct ways: 1) If they cure the debt by printing money (which is what they did after Viet Nam) and causing massive inflation, then my money becomes worth less. The wealth that my money represented, is transferred to the government in an illegal and un-Constitutional tax.

2) If they don't cure it with money printing, and continue to pay the debt, then the interest alone could better the lives of average Americans instead of paying interest with it.

Using debt wisely is prudent. Using debt stupidly is suicide. Being in the financial business, I would think you would know that.

excon

Clarification/Follow-up by ETWolverine on 10/13/04 10:24 am:
>>>1) If they cure the debt by printing money (which is what they did after Viet Nam) and causing massive inflation, then my money becomes worth less. The wealth that my money represented, is transferred to the government in an illegal and un-Constitutional tax. <<<

True. But I haven't see anyone do that. At this point, fiscal policy is being regulated via the Fed Funds Rate... it has been rising a bit to keep inflation in control, but not so much that the cost of money becomes prohibitive and slows down the growth of businesses. To date, fiscal policy has been sound (though I admit that I would not have done that last rate hike that we saw during September... but that is a matter of opinion and not one that will have a HUGE effect on the economy one way or the other in the long term). Money is still relatively cheap to obtain, which means businesses have room to grow through borrowing. Nobody is increasing the amount of money being printed, which is an inflationary policy. At this point, the FED seems to be concerned with keeping inflation DOWN so as not to screw up the economic recovery, while at the same time keeping money cheap enough for businesses to acquire it if they need it.

>>>2) If they don't cure it with money printing, and continue to pay the debt, then the interest alone could better the lives of average Americans instead of paying interest with it.<<<

The money was ALREADY used to better the lives of the average American in the form of the tax breaks... which, incidentally, had a greater direct effect on the upswing of the economy than lowering the deficit through increased taxes would have. Furthermore, the money was already out the door... crying over spilled milk of running up the deficit in the first place is a useless excercize. Is it possible that we could have avoided the deficit? Maybe... if we didn't have 9-11, the war, and the upgrade in homeland security to pay for. But that money all needed to be spent. And the tax cuts were absolutely necessary too, because without them, we really would still be in a recession... and fighting a war during a recession is VERY tough to accomplish.

So the money is out the door: no use crying about what could have been. The question, then, is how to close the gap. Answer: tax cuts to provide a job growth stimulus. Yes, it means increasing the gap in the very short term. But in the medium and long terms, the benefits are substantial, and the gap WILL be closed.

THAT is how debt is used wisely... to create a benefit in the long term.

So yes, I agree, debt used wisely is very prudent... which is why Bush is 100% right about the tax cuts.

Elliot