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Discussion: (4 comments)

  1. Vic Volpe

    As I said on these posts many times, this is not a economic problem, IT IS A POLITICAL PROBLEM. We went all through the 19th Century without a debt ceiling. I think it was around WWI or the 1920’s when the current debt ceiling was enacted by Congress to place controls on the Executive Branch. I do not have any answers for you on how to solve/control government spending — it calls for responsibility on the part of politcians and civic engagement on the part of the public.

  2. Could 9 out of 10 economists be wrong?

    Since 9 out of 10 are Keynesians or neo-Keynesians I expect 9 out of 10 to be wrong on many issues most of the time.

  3. re: ” But this logic fails for collective decision making. When a group of people – like Congress – makes decisions through a political process, the group does not behave like a rational consumer.”

    you have many countries in the world function collectively and politically, all 50 states, hundreds if not thousands of corporations and non-profits not to mention churches and other community organizations.

    Most of them don’t spend more than their revenues although clearly there are numerous examples of those that do.

    We usually had a reasonable approach to spending and deficits in this country – until 911… that’s when things came unglued and the phrase “deficits don’t matter” came into being.

    so I’m not sure “collective” and “political” is the flaw.

    Our problem, unlike other countries, we never met a way we did not like and we don’t mind at all spending about 1/2 of our total revenues on National Defense even if it does mean we spend more than the next 30 countries combined.

    “policeman of the world” only gets you so far in justification. Sooner or later – Keynesian policies might be the favorite whipping boy but clearly our level of spending on defense is an issue,

  4. James Ashby

    ” raising America’s debt limit … is a sign that the U.S. Government can’t pay its own bills ”

    Fiat money is proof neither Mr. Obama or the US government cares.

    ” a debt ceiling … A cap on spending or … balanced budget rule … such restraints certainly have the potential to improve collective decision-making. ”

    Not with fiat money. Money’s value is collective decision-making fiat money rejects, guaranteeing government in debt. A gold dollar is certain to improve collective decision-making, needs no government debt.

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