
Originally Posted by
Sparkles
If I borrow money non-stop, at some point, no matter how much I like borrowing money, I must stop and pay off those bills. If I don't, I'll end up bankrupt and then I'll have no choice but to stop and pay off my bills, only this time with more pain involved as the bankruptcy court will come to my house and hull away most of my belongings.
There is no doubt that government cutting spending, does have some effect on the economy, if for no other reason than because government spending itself is part of the GDP number.
Thus the government can directly change that number to make the economy look artificially better or worse than it actually is. The private economy could be growing, and if the government cuts spending fast enough, it will look like GDP is shrinking. Similarly the private economy could be shrinking, and if government spends enough, it can make it look like it's growing.
But the problem with using government spending to artificially increase GDP, is that no matter how good it looks in the short term, in the long term you eventually have to face the music or go bust. Just like a private individual who borrows and borrows until they are bankrupt, a government can, and does do the same thing. Greece again, did this. They kept borrowing and borrowing, and making their borrowing look like growth in the economy. But eventually the credit card maxes out, and the bills come due, and now Greece is in the process of (mild) default.
This is unavoidable. You can't borrowing into prosperity. At some point you have to cut your spending.
See, if your theory was right, then we, and Europe, should be in an economic boom. We've spent TRILLIONS in stimulus money, which included paying for teachers, police, fire fighters, social workers and many many more.... yet the economy is not booming, and Europe is worse off than we are, even though they spend far more.
So the facts simply don't support your claim, no matter how logical it seems.
And I wager I know why. It's because you are not including the economic down side to spending, namely that for every dollar giving to a teacher, it represents a dollar plus more, confiscated from someone else. Thus every job created in the public sector, wipes out a job and more in the private.