FuckyWucky [none/use name]

Pro-stealing art without attribution

  • 52 Posts
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Joined 2 years ago
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Cake day: March 21st, 2023

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  • Means nothing in and itself. It gives no context of what it was previously. And higher prices from tariffs erodes the real injection coming from deficits, which puts a drag on growth.

    Fiscal deficits are ex-post , you can’t know it in advance, you can make predictions only. And there are some reasons a fiscal deficit may arise. The revenue part of the budget made by the Congress is just a pure guess while expenditure is more “fixed” (depends on the state of the economy too).

    Eg. The Government does a huge discretionary infrastructure spending bill, but the increase in demand results in tax revenues flowing back, maybe even exisiting stocks of savings being used up, so the actual deficit ends up being lower than expected.

    1. Country runs a trade deficit, if your country is running a trade deficit, as is the case with US despite Trump’s attempts, the only way for the economy to grow or even just stay stable is with Government deficit, because otherwise you will see private debt blow up. Thus, US is naturally inclined toward a fiscal deficit and that’s fine.

    2. Deficits rises when the economy shrinks, as tax revenues dwindle due to biz shuttering workers being laid off and unemployment cheques and marginal welfare spending that exists goes up, the “automatic stablizers”. None of these are discretionary spending decisions and they only replace part of the income losses in the non-Government sector.

    3. Deficit rises because of discretionary spending choices, happens for example during wars or massive spending by the Govt in the real economy. To manage inflationary pressures in such cases, the Gov may do forced savings, price controls, rationing, one off taxes etc. But this is not what’s happening to the U.S, I’m certain.