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View Diary: How much longer can the Austerians and their puppets go on with their failed policies and lies? (125 comments)

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  •  not true, it has just been done seven times (8+ / 0-)

    in the entire history of the US, and each time, a depression followed soon after, as Michael Hudson points out:

    Government budget deficits pump money into the economy. Conversely, running a budget surplus retires the public debt or currency outstanding. This deflationary effect occurred in the late 19th-century, causing monetary deflation that plunged the U.S. economy into depression. Likewise when President Bill Clinton ran a budget surplus late in his administration, the economy relied on commercial banks to supply credit to use as the means of payment, charging interest for this service.

    As Stephanie Kelton summarizes this historical experience:
    The federal government has achieved fiscal balance (even surpluses) in just seven periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, 1920-30 and 1998-2001. We have also experienced six depressions. They began in 1819, 1837, 1857, 1873, 1893 and 1929.

    Do you see the correlation? The one exception to this pattern occurred in the late 1990s and early 2000s, when the dot-com and housing bubbles fueled a consumption binge that delayed the harmful effects of the Clinton surpluses until the Great Recession of 2007-09.

    Remember also that FDR gave in to the deficit hawks in 1937 and tried to balance the budget and cut back on New Deal spending. It led to a recession, and he soon reversed himself and asked Congress for more spending.

    "In America, the law is king." --Thomas Paine

    by limpidglass on Tue Jan 29, 2013 at 03:04:48 PM PST

    [ Parent ]

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