Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
On 2:
This deficit must be financed.

You mean the trade deficit impact of the spending? Well, yes, but in the middle of a global economic downturn is the time when it will be least difficult to finance that ... and it only needs to be finance, since it is self-funding, given that the eventual savings on the trade account will more than offset the original trade-account impact of the government spending on infrastructure.

On 5:

5. The amount of money printed is not going to be matched by an equivalent amount of goods.

Why not? I would argue the exact contrary: under strong recessionary conditions, the amount of money printed will of course be matched by something quite close to that amount of newly produced goods and services.

It is a major government spending program on infrastructure when the economy is booming, or at least well advanced in a normal recovery that the spending will not be matched by that amount of newly produced goods, but instead will in part shoulder aside existing production, which is an inflationary process.

You seem to be assuming that when faced with the orders from the government, suppliers will turn their backs on orders from other customers, rather than increasing production to meet the new orders without turning away existing customers. Which in a deep and global recession is presumption that I find to be absurd.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Sun Oct 12th, 2008 at 10:25:41 PM EST
[ Parent ]

Others have rated this comment as follows:

melo 4
ceebs 4

Display:

Occasional Series