Obamanomics - How is it possible it wont destroy the country!

As I watch the news day after day all I see is another plan by Obama and Congress to spend more money on a new project or a new social engineering plan. The amount of money being spent is uncomprehendable to my tiny brain. So I try to equate things back to a household or a business, which I kind of understand. In a house or a business if you spend more money than you make long enough you will go bankrupt, but apparently our President and Congress have a plan to avoid this or they would be insane. So what is the long term plan to pay this money back.

Now I know some of you are going to say there was already 7-10 trillion of debt before Obama was president and that Reganomics were at least partially responsible for that. I think those are good points. I have thought through that and I realized that Trickle Down economics did stimulate the economy but still grew the national debt. The reason, I believe, is because Reganomics cut taxes, but it didnt cut government spending enough to overcome the loss of income from cutting taxes.

Anyway, enough of what I am saying. I obviously dont have the answers. So someone please explain to me how our Government can keep increasing spending and raising taxes and this not negatively affect our country in the long run. Even if you discount the effect of the debt, raising taxes will raise the price of our goods and services and make them less attractive to worldwide consumers.

Thanks for any help you can give me in understanding this.

The whole idea that congress and B.O. are following is Keynesian economics implemented during the Great Depression. According to this theory, deficit spending by the government has a "multiplier"effect on the economy as a whole thus stimulating savings and consumption.

In the Keynesian theory, The whole economy acts very differently than money issues for the individual because everything is intertwined. It is also believed that the quantity theory of money, that the more money in circulation leads to inflation, does not apply to deficit spending because there would have to be full employment, which we do not have.

This is what they believe and so far it has worked.

Personally, I think that it is just a bubble. There will eventually be a breaking point where the economy can no longer be artificially inflated by the government and the bubble will burst.

It just depends on who you ask on what the effects will be down the line. Like I said though, Keynesian theory is all the rage right now. People who don't agree with it are marginalized. Any Keynesian economist will tell you that we are going to have a great time of economic expansion once the money gets spent by the gov.

Hope this clarifies a little for ya.

reply to post by SuperSecretSquirrel

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Thanks for the info. I keep hearing Kensyian economics thrown around but I never really knew what it meant until your explanation. So is the theory that by dumping that much money into the economy that it will grow so much we will be able to recoup that all in taxes over the next 5-10 years? I agree that dumping money into the economy should make it grow, but it still has to be paid back at some point. Your point about the economy growing artificially is well taken. That is exactly what they are doing, but how can it be sustained once they quit dumping money in.

It can't be. After the the New Deal was enacted to bring the U.S. out of the depression, there was an attempt to go back to a budget surplus. The result was another recession. Since then there have only been a couple of years of budget surplus.

The problem with this system (IMO) is that the economy is so reliant on government deficit spending that without it, it would collapse. Does this sound like a real economy to you? It just sounds like a mega bubble that everyone is trying to keep from popping to me.

I agree that the U.S. will probably have another boom period, but how much will inflation play a role? How much longer can the cycle be continued? How much bigger can it get? These are the questions that none of these economists are asking themselves. "WHERE DOES IT END??"

When Clinton left office the budget was balanced. After eight years without a president we find ourselves in this mess. So if you think the country's going to the devil, blame the Repugnicans.

reply to post by Gawdzilla

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It was only balanced because he cut defense spending so much.

Blame "Repuglicans"? I think that both parties are just the two heads of the same monster. None of them know a damn thing about economics. Most of them are, in fact, lawyers.

Do you think that your beloved democratic congress and pres are doing the right thing by approving all the trillions of dollars? Do you think that enormous deficit spending is going to solve all of our problems?

reply to post by SuperSecretSquirrel

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I agree it cant go on forever. I say lets just take the hit now and get it over with before it gets worse. I see some value in letting our currency drop in value against the rest of the worlds. If that happened the stuff we make wouldnt cost as much vs the rest of the worlds stuff. Our cost structure is screwed up compared to say China and India. We can never compete with that in a global economy. How do you compete when one guy makes 50k a year to make a car and another guy makes $2k a year with no benefits?

reply to post by SuperSecretSquirrel

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I do blame Bush for part of the mess because he spent money like a drunkin' sailor. However, that doesnt justify spending even more money when the economy is a freaking disaster. You wouldnt go out and buy a new house and car if your family was going broke. You would have to cut expenses, so why all the new social programs and social projects and bailouts?



[edit on 29-4-2009 by justsomeboreddude]

You do realize, that everything would be even worse with McCain in power?

Instead of complaining about the president YOU chose, you should choose
more carefully next time.. and not just fall for their fancy campaigns and
populist propaganda shows. Use your mind for a change, study the programs
each candidate lays forward, instead of only watching what you see on TV
about the candidates. Because if you do that, you always let the richest
candidate win, regardless of how suited or unsuited he is for the job.

Use your bloody minds next time people, I can understand the education
you get in America being far below par of any other country, but at least
you have the internet to educate yourself. Use the internet, educate your
self.. don't let them keep you dumb and ignorant, educate yourself now!

All you have to do for that is click and read, click and read. Which I hope
is something everyone there can do! Don't let them cuddle you in your
laziness.. fight back, fight back intellectually.

reply to post by Wehali

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I didnt vote for Obama, because he said this is what he was going to do. I will say he is a man of his word, more or less.

I dont know where you are from but not everyone in America is as stupid as the rest of the world would have you believe.

The money in my wallet is U.S. Currency...it is a fiat instrument of debt. It's not attached to anything of real or intrinsic value. In fact it is ceremonial and part of a religious ritual hence...In God We Trust...written all over it.

The Federal Reserve was incorporated in 1914 as a Not for Profit Religious Corporation...The IRS was incorporated in 1918 as a For Profit Corporation...Social Security incorporated in 1934 is a For Profit Corporation.

The United States of America functioning at the moment was incorporated in 1988 as a Not for Profit Religious Corporation.

Well so much for seperation of church and state!

How can you screw up a system that is not real? The U.S. Currency has no value other than percieved value...a value that is honestly percieved the world over because if you don't percieve it we will just Nuke you flatter than a pancake or leave bomb craters, orphans and cripples from one end of your country to the other.

The economy is pretty much Parker Brother meets Jesus Christ in the Religious Edition of Monopoly.

Now anyone who has ever played the Parker Brother's board game version of monopoly knows one thing...it's best to be the banker...it's easy to cheat!

reply to post by ProtoplasmicTraveler

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I love you man! You just sum up things so nicely. I get where you are coming from. But being the banker doesnt mean you can cheat so much that everybody catches you. Then they will quit playing the game.

Umm, OK. Derailing aside...

If Bush and the republicans spent all that money and put us so far into debt, why isn't the U.S. in tip top shape?

If you look at what B.O. and the Dems are doing, they think that there wasn't near enough spending to support/boost the economy.

It just cracks me up how this theory of spending your way out of debt is so widely accepted.

It will end eventually people. The faster a nation rises to the top, the faster it will collapse. I hate to say it but I think the U.S Economy is like a firework, took off like a rocket and ends with a bang. With nation building, slow and steady always wins the race in the long haul. Keynesian economincs is all about the short term.

reply to post by SuperSecretSquirrel

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"If Bush and the republicans spent all that money and put us so far into debt, why isn't the U.S. in tip top shape? "




You think they spent the money CONSTRUCTIVELY? Oh, please. A large part of it literally exploded.

reply to post by Gawdzilla

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And you think that giving tons more money to the banks will be better than giving it to the military-industrial complex?

Both will/have hoarded the cash or used it to expand...

Not if there is no other game to play!

Ask any entertainer you happen to see...the best audience is a captive one!

Moving to Mars anytime soon?

Hey I get to go again I rolled doubles!

reply to post by ProtoplasmicTraveler

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But there is several other games to play. You could base the world economy off of the Euro, the Chinese Currency, or some oil producing nations currency. Pretty much anything else that is not bankrupt.

Sorry, I said nothing about the banks, but now I will. When the Repugnicans "deregulated" the banking industry they were warned that something like this could happen. Didn't matter, they were owned by the bankers, so they did what they were told to do.

Or you could base it on gold or silver.

Say- That's a novel idea!

reply to post by Gawdzilla

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I see your point Gawdzilla, but it still doesnt leave the current administration and congress off the hook for spending irresponsibly.