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Can't you do it when you you're at the top of the business cycle then, when the government usually runs a surplus and inflation is a worry anyway?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Dec 14th, 2011 at 10:58:24 AM EST
[ Parent ]
That's when you want to run surpluses, if you ever do. But the ability to run deficits during the downturn has no relation to your ability or will to run surpluses during the upturn. Unless you constrain yourself with silly and arbitrary rules like a 60 % of GDP government debt ceiling.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Dec 14th, 2011 at 11:19:40 AM EST
[ Parent ]
But the ability to run deficits during the downturn has no relation to your ability or will to run surpluses during the upturn.
Not if you keep devaluing your currency through inflation or repeatedly default on government debt. But if you actually want to have a sustainably good economy, you need to repay debt (as a fraction of GDP) when things are going well, if you want to do deficit spending when the economy is bad. Otherwise you'll end up as Greece. You can't spend more than you earn indefinitely. Eventually something will have to give.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Dec 14th, 2011 at 11:33:13 AM EST
[ Parent ]
Otherwise you'll end up as Greece.

And if you do you end up as Spain or Ireland. No amount of deficit reduction, no matter when it happens can unfuck the Eurozone.

by generic on Wed Dec 14th, 2011 at 12:10:20 PM EST
[ Parent ]
Not if you keep devaluing your currency through inflation

shrug

I have no great issue with inflation in the mid to high single digits. Beats unemployment in the mid to high single digits.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Wed Dec 14th, 2011 at 12:39:21 PM EST
[ Parent ]

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