Posted by
aul on Sunday, January 31, 2010 9:00:00 PM
Attention Town Hall bloggers! I need help from economists or other financial wizards.
The evils of a federal budget deficit has, over the years, been a bit of a mystery to me. It sound terrible enough, especially when compared to a family budget. If an auto mechanic's family was in debt for say, $60,000, in 1960, that would seem overwhelming. If this debt had grown to $150,000 by 1965, that would be a nightmare. As the years and the decades went by, and that same family's budget ran a deficit to over a million bucks ... Whoa! Wait! That probably would not happen. Who would extend credit to someone who just continues to run up more debt?
Unfortunately, it don't work that way with the federal government. It has tax increases and a money printing press at its desposal. Actually, it can still borrow money to the best of my knowledge, but how long will some entity loan money to it with deficits into the trillions of dollars? Huh! Now I am a far cry from an economist, but this federal budget deficit business sounds pretty terrible as well.
On the other had, the feds have been running deficits for the last 40 years. There might have been a surplus once or twice, or so some politicians claimed. Anyway, with deficits for so many years, why did nothing bad happen? Sure, there have been economic slumps, but there certainly was no Great Depression II. Why not? Why do so very few worry about these deficits. I suppose because it seems to be a way of federal budget life.
Again, I am not an economist. Therefore, I am calling on economists, accountants, financial managers, anybody who can answer my question: What's so bad about a federal deficit? And please folks, keep the explanation simple.
Thank you.