Simple Explanation of the Need for Federal Budget Deficits.


I think I finally found a way to explain the impact of federal government deficits on the private economy in a way that non-experts may be able to understand. I’ll give you my full response to a comment on Ed Markey’s post.

Obamacare is saving money although not nearly as much as Medicare for all would have saved. If there is any flaw in the Democrat’s health care changes over the last 8 years, it is that it failed to even include a government option, let alone Medicare for all.

The federal government creates US money. The federal government puts that money into the private sector by spending it. If there were no federal government deficits, there would be no new money added to the private sector economy to replace all the money that is leaving the domestic private sector and going to the foreign private sector because of our foreign trade deficit.

Without the deficits, there would be a huge deflation and there would be such a huge contraction of our economy that you would be seeing massive breadlines larger than during the depression. All of our jobs would be outsourced because of the strength of our money, after deflation, compared to other nations.

We need a gradual inflation to help the transition to more equal wage scales around the world. That transition would help lessen the size of our trade deficits, lessen the need for huge federal budget deficits, lessen the outsourcing of our jobs, and spread the pain of adjustments more equally among all income levels in our country. That adjustment of wage levels is inevitable, but we don’t need to isolate the burden of that adjustment to just the lower 90% of income earners. The oligarchs should not be allowed to foist that burden on only the rest of us.

Some of the world wage scale adjustment will come from the increased standard of living in foreign countries, which will be no burden to us at all.

Ed Markey is no liberal. He is what is called a neo-liberal which translates into not-liberal or anti-liberal.

Here is the link to Ed Markey’s post The real March Madness is President Trump’s budget.

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