Eric:
I've heard theories along these lines before and I don't totally dismiss
them. But if it were really true, how does it jibe with the prosperity of
the 50s when we had no debt (the last prosperous time we had no debt (with
Kennedy being the first president to accumulate debt -- and we've been in
debt ever since, with each president, until Clinton, growing the debt more
than his predecessor).
But that was a long digression ... the point is, the 50s _might_ be an
argument against that theory. I say might, because those were also unusual
historic times for this country -- right after WW II when we were much
stronger than the rest of the world, we had a great deal of energy as a
country and we exported A LOT.
But there is also the theory that debt restricts the cash flow, making it
harder to borrow money, which means slower growth. You could make the case
that if Bush had spent the money he spent on the tax rebate on debt
reduction, he would have done as much or more (if he's done anything) to
stimulate the economy.
H.
-----Original Message-----
From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED]]
Sent: Thursday, August 16, 2001 10:29 AM
To: CF-Community
Subject: RE: Bush's success (was RE: Stem Cells..)
> We should have paid off the debt (or as much as
> possible) while we had the money to do so.
While I was studying for my bachelor's degree, I had to take two courses in
economics. The professor did a wonderful job of explaining how the study
of economics was a science, but the application of economics wasn't because
it all depended on theories that were very difficult to prove since they
could never be studied in isolation.
One such theory, that I bring up solely as an academic exercise, is that
the government's debt *isn't bad*. Much like a corporation uses other
people's money to maximize revenues, the government uses other people's
money to do more without raising taxes. Where does the government get its
money from? A very large portion of it comes from our US Savings Bonds
(T-bills). So, looking at it from the perspective of "our debt", who do we
owe the money to? Ourselves. So when does it hurt the government to have
all that debt? Only when it tries to pay it back.
Obviously, this is only one of those funky economic theories, and I don't
really believe it myself because not all of our debt is from T-bills. But
it is very interesting to think about, especially if you limit the
discussion to T-bills. You could make the argument to pay off our debt to
banks and foreign countries, but keep the Bond debt in perpetuity.
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