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In praise of periodic deficit spending

By       Message Martin Carbone       (Page 1 of 1 pages)     Permalink    (# of views)   No comments

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1) Much has been written about (a) the need for a balanced government budget and (b) a refrain from deficit spending. Note a "balanced government budget" is not the same as "balanced government spending". While hardly anyone would argue against balanced government spending, it is fairly easy to argue that "deficit spending" can be a good thing if the deficits lead to worthwhile infrastructure projects that increase the wealth of the country.

2) Certainly it is worthwhile for the government to spend any amount of money if that spending leads to needed roads, airports, dams, dikes, waterways, agricultural research, education, internal peace, sewage treatment, conservation of our resources and all those other things that are hallmarks of a great nation.

3) Arguments are often made that the government should operate on a balanced budget just like all families operate on a balanced budget. That is, in my opinion, nonsense. Most successful families wisely go into debt to buy (invest in) their first house and thus operate on an unbalanced budget for 20 or more years as they build equity and wealth. Similarly -- the smartest families go into debt (invest in) to start businesses and provide for a good education for their children, thus unbalancing their budgets for some time. As long as the debt is aimed at good investments, it is not only wise -- but prudent and necessary.

4) It is just as wise for the government to spend more than it takes in as long as the deficit is for worthwhile projects.

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5) In other words, "balanced spending" and a "balanced budget" are not the same thing. A "balanced spending" is generally good while a "balanced budget" can be stifling.

 

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Retired engineer, product and business developer, inventor (six patents). Currently (a) trying to completely understand our money and banking systems and (b) planning to pass that information to the American public. Photo is ca. (more...)
 

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