{"id":40438,"date":"2018-11-12T19:25:05","date_gmt":"2018-11-13T00:25:05","guid":{"rendered":"http:\/\/olduvai.ca\/?p=40438"},"modified":"2018-11-12T19:25:05","modified_gmt":"2018-11-13T00:25:05","slug":"the-economic-consequences-of-debt","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=40438","title":{"rendered":"The Economic Consequences Of Debt"},"content":{"rendered":"<h3><a href=\"https:\/\/realinvestmentadvice.com\/the-economic-consequences-of-debt\/\">The Economic Consequences Of Debt<\/a><\/h3>\n<div class=\"content\">\n<div class=\"pf-content\">\n<p>Not surprisingly, my recent article on <a href=\"https:\/\/realinvestmentadvice.com\/the-important-role-of-recessions\/\" target=\"_blank\" rel=\"noopener\"><em>\u201cThe Important Role Of Recessions\u201d<\/em><\/a>\u00a0led to more than just a bit of debate on why\u00a0<em>\u201cthis time is different.\u201d<\/em>\u00a0The running theme in the debate was that debt really isn\u2019t an issue as long as our neighbors are willing to support continued fiscal largesse.<\/p>\n<p>As I have pointed out previously, the U.S. is currently running a nearly $1 Trillion dollar deficit during an economic expansion. This is completely contrary to the Keynesian economic theory.<\/p>\n<blockquote><p><em>\u201c<\/em><em>Keynes contended that \u2018<strong>a general glut would occur when aggregate demand for goods was insufficient, leading to an economic downturn resulting in losses of potential output due to unnecessarily high unemployment, which results from the defensive (or reactive) decisions of the producers.\u2019<\/strong>\u00a0 In other words, when there is a lack of demand from consumers due to high unemployment, the contraction in demand would force producers to take\u00a0defensive actions to reduce output.<\/em><\/p>\n<p><em>In such a situation, Keynesian economics states that government policies could be used to increase aggregate demand, thus increasing economic activity, and reducing unemployment and deflation.\u00a0\u00a0<\/em><\/p>\n<p><em><strong>Investment by government injects income, which results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth.<\/strong> The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.\u201d<\/em><\/p><\/blockquote>\n<p>Of course, with the government already running a massive deficit, and expected to issue another $1.5 Trillion in debt during the next fiscal year, the efficacy of <em>\u201cdeficit spending\u201d<\/em> in terms of its impact to economic growth has been greatly marginalized.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Economic Consequences Of Debt Not surprisingly, my recent article on \u201cThe Important Role Of Recessions\u201d\u00a0led to more than just a bit of debate on why\u00a0\u201cthis time is different.\u201d\u00a0The running theme in the debate was that debt really isn\u2019t an issue as long as our neighbors are willing to support continued fiscal largesse. As I [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[6430,195,201,12584,467,8511,15470,4638],"class_list":["post-40438","post","type-post","status-publish","format-standard","hentry","category-economics","tag-consequences","tag-debt","tag-deficit","tag-government-spending","tag-keynesian-economics","tag-lance-roberts","tag-real-investment-advice","tag-recessions"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40438"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40438\/revisions"}],"predecessor-version":[{"id":40439,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40438\/revisions\/40439"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}