The great disagreement over whether budget deficits and debt
have more benefits or costs shows that there is a great level of uncertainty in
the theories of economics. Also, it's important to note that much of the
uncertainty deals with macroeconomics. My
assumption before the reading was that macroeconomic indicators are directly
affected by budget deficits and debt whilst microeconomic indicators are not
affected indirectly, but I believe my assumption isn't correct after the
reading. Also, I often believed that the budget deficit shouldn't exist to stop
debt from rising, but the usefulness of a surplus or a balanced budget doesn't
seem to yield as many benefits as expected. Thus, even I have trouble
understanding whether there must be a deficit, so great disagreement among
economists makes much more sense when weighing the costs and benefits of fiscal
Keynesianism. It is an important point that the United States is exclusive
among powerful nations with the ability to pursue fiscal Keynesianism and not
worry too much about how the mounting debts will be paid in the future. Please
note that the European Union seems to follow suit, but not with as much success
as in America. I say that because many new members of the EU don't see the
promised economic convergences towards richer nations in the Union that were
promised with so many austerity measures, unequal power distribution and
regulations favoring richer nations, and high levels of unemployment.
With so many fiscal policies failing in the European Union
that have even lead to the United Kingdom to ask to secede I believe austerity
measures aren't always the best solution to the debt caused by budget deficits.
I believe it's important to remember that not all countries pay debt in the
full amount with much debt forgiveness practiced throughout history and even in
the present. The creditors giving money to the United States are not interested
in the economy performing below capacity and want consumption to continue
because it directly affects the many creditors' prosperity, so it's unclear
when the debt will be paid or whether it will even be paid without any
forgiveness because it would seriously undermine the businesses associated with
the creditors. As a result, I somewhat favor fiscal Keynesianism, but this post
is largely an opinion and there is much room for me to err when much of this
conclusion is based on the situation in the EU and my understanding of it.
No comments:
Post a Comment