Alrighty, I knew that if I sat back for a couple of days, the Democrats would quietly start passing retarded legislation. It turns out, they’ve been hard at work insuring that our country will plunge into depression next time the going gets tough.
It would seem that Nancy Pelosi and her band of “revolutionary” tards forgot to take economics when they went to college. Earlier this week, the Demotards passed legislation that “sounds” reasonable. Hell, it sounds like something I’d do, if I wasn’t abnormally smart and educated. They passed new legislation that requires that any time a tax CUT is given, one of two things must happen automatically, a Federal program must be cut, or another group of taxpayers must have an increase to make up the difference.
Wow, Incredipete, that sounds VERY reasonable… it sounds like they’re trying to balance the budget! What’s wrong with that?
I’m glad you asked. It’s time for you to get smart so you won’t be duped by the Demotards when they get on TV and the radio and start talking about “fiscal responsibility.” They’re setting us up for disaster several years down the road.
This explanation will be visual and elementary so it will make sense even in you have no background with economics.
The gross domestic product (GDP) is the sum of everything our country sells each year. (Often talked about in terms of goods produced, yada yada.) Think of it as every dollar that’s spent on finished products by our country in a single year. It’s currently around 7 Trillion dollars. That’s good, in case you’re wondering.
So what the hell does that mean to you? Again, I’m glad you asked. Industry in America produces lots of dangerous, shoddy products each year, all of which get purchased by someone, which puts money back into the industry, who pays their employees, who go out and spend the paycheck to purchase other dangerous, shoddy products, and the cycle continues forever and ever.
Individual consumers buy a lot of the dangerous, shoddy products we produce, but it’s a relatively small amount of the GDP… a big chunk of the buying that happens in America is by businesses. Think about how many things the company YOU work for buys from other companies. There’s another big spender out there, though… the biggest spender, in fact. It’s the Federal government. Let me show you a hypothetical picture of what it looks like:
So, the three spending components of the economy are consumers, businesses, and the federal government. The sum of everything those three groups spend equals the gross domestic product. With me so far? Good.
So, what happens in the economy starts to go into a recession… let’s say suddenly interest rates go up to counteract inflation. Businesses will put of capital projects until interest rates go down. This means layoffs and less product being produced, because less people can afford to spend money on their dangerous, shoddy products. Here… look at the picture:
See the yellow area? That’s the gap created when businesses and indivuals start spending less money. Hmmm. Houston, we have a problem. That means there’s excess production… either someone soaks it up, or it’s going to be wasted. Who does the “soaking up?”
Well, the only one of the three groups that can spend money when things are bad are the people who print the money… the feds.
Ahh. Thank god. The feds started spending MORE money, so the GDP didn’t go down. What you see in that diagram is what’s called “counter-cyclical spending.” The Federal government can spend MORE when things are bad, and LESS when things are good… which balances things out. So… what does that mean to the famous “budget deficit?” Well, when things are good, the deficit gets better, and when they’re bad, it’s the opposite. When Clinton was in office, he hit the economic cycle at a good time, and they actually had SURPLUS budget… they had MORE money than they could figure out how to spend.
But Incredipete, how can the government just spend money that isn’t there? Well, it’s because they can print money. States can’t do that, neither can you or I, nor can businesses. The fact is, it’s the government’s JOB to throw money at recession. Why is that?
Well, look what happens if they DON’T do it:
Ahh. If recession hits and the government doesn’t increase their spending…. the GDP goes down and the snowball affect makes the economy spiral downwards into depression. It happened in the early 1900’s, and it can happen again. It happened in the 1900’s because we didn’t understand how all of these economic components worked together. Now we do. Well, some of us do… the ones who have studied Keyensian economics.
Counter-cyclical fiscal policy has been used by every administration since the Great Depression, and now the Demotards have BUILT IN legislation that insures it’s only a matter of time…. till the next Depression.
What should we do about it? Well, vote Republican, buy a gun, and invest your money in precious metals.