Can somebody explain this logic?
I'm $10,000 in debt, so the best thing for me to do is raise my debt to $30,000 then cut it in half over the next 10 years.
How is that a GOOD thing for me?
It's what Obama and congress are doing (on a scale of trillions of dollars), and it's obviously logical to them.
my plan: cut subsidies and tariffs, cut taxes for business expansion and for all taxpayers, let the housing market find it's true bottom, no bailouts - let the market weed out the weak and inefficient, and no earmarks and wasteful pork
- Bigsky_52Lv 61 decade agoFavorite Answer
Actually this gets done all the time in the private sector. I've even done it myself.
I couldn't get a job after graduating from college in 1999 with a chemical engineering degree. When the tech bubble burst it took a lot of other jobs with it. After waiting tables and tending bar for two years I decided to take out some loans (on top of my loans from undergrad) and go back to grad school. After two years I had a master's, and have been working at paying off my loans for the last five years. I effectively raised my debt, increased my earning potential, and used the realization of the greater potential to pay down the investment. Walk into any financial aid office in any college in the country and you'll find thousands of people doing the exact same thing.
That's the logic, at least, and there is some validity to it. Debt incurred against future profits is one of the cornerstones of our economy. The main thing to remember is that there MUST be future profits to sustain the system. If you take out a student loan and drink it away while learning nothing then you've simply squandered the money, and are much worse than before. Our current situation reminds me of when I was working in grad school as a bouncer, and saw kids with their first credit card buying shots for all their friends. Repeatedly. They had a great time, until the credit was used up. Then they would angrily DEMAND that their friends buy them drinks, claiming that they were owed one.
My plan: repeal the income tax, enact a balanced budget amendment, abolish corporate welfare and bailouts.
- Erich MLv 41 decade ago
Well, the comparison is flawed. You work, either offering a needed service or product. You are paid in return for this service or product. You then spend it on other products. So, now you're $10,000 in debt and not spending any money except for the bare necessities and nobody is buying you're product or service. Therefore, no one is investing in the company you work for. The business cycle is not being stimulated. The flywheel of the economy is consumer spending, unfortunately,the US doesn't manufacture much anymore, and what they do manufacture isn't usually a necessity of life, albeit, they'd like to convince you that it is. Since no one is buying anything, no one is investing in anything. That leaves the spender of last resort, government, to stimulate the business cycle by implementing infrastructure spending, awarding government contracts to private industry and stimulating the business cycle. Think of contractors building a bridge, they hire new people, they purchase or lease equipment, that equipment needs parts and service, the parts house needs more people to fill orders, the shipping companies need more people to deliver these parts, the port a potty renal place needs more drivers to deliver their products to job sites, etc, etc.
You can't balance a budget in a deep recession. History has proved this. You can, however, strategically stimulate the business cycle with government spending which will stimulate more spending, tax revenue, and investment.
I won't say the stimulus is being used appropriately, but I am a proponent of the Keynesian model as it has been demonstrated to work. Okay, ready for my thumbs down now. Thanks.
- Anonymous1 decade ago
the theory is that the economy is the flow of money
and where it is flowing to or from is no so important
and that the creation of value is not important at all
so the concept is similar to a patient in shock who needs more blood (money) circulating through the system
without attention to the oxygenation (value) being transported by the medium (money)
my opinion is that this stimulus is delusional
what needs to be increased is available work that is producing something of value
but the USA has been getting out of the business of producing value for a few generations now
i agree with your solution
but there are a lot of folks who's only talent is "consuming"
- koltzLv 43 years ago
via 2020 the ecu has suggested that 15% of capability could desire to come from renewables,so as we can be reliant on oil for 80% this is clever to additionally communicate approximately oil furnish. an exciting fact is that north sea oil,it is working out,is having a renaisonce.basically fifty seven% of north sea oil has rather been drilled.the different 40 3% is so deep down as to make it unprofitable to drill.....in the previous.the government is presently available out many exploration licenses and so in time so lots extra oil would be extracted from the north sea.so we can't condem the oil industry as we can nonetheless make extremely some funds ourselves.interior the governments defence,they are thinking beginning the biggest rail growth in this u . s . for one hundred fifty years.they could make a gesture and tell the vehicle manufactures that from x date all autos could desire to do one hundred miles to the gallon.In 1982 the hot mini metro did 83miles according to G
- How do you think about the answers? You can sign in to vote the answer.
- Agent SmithLv 71 decade ago
Two things will happen:
1) Obama will deputize 30 Million illegals as citizens and mess up any chance of a fair vote in 2010.
(30 Million times three ACRON votes = 90 Million new votes. He wins fair and square!)
2) Congress will change next year and reverse the insanity.
I say it's 50/50.
- Poohcat1Lv 71 decade ago
I totally agree. It amazes me how the government can keep telling us that this is good for them...but the economists keep telling us how important it is for us citizens to live within our means if we want to be financially solvent. I don't understand their logic either....unless it is to get us used to living with less....because that is what will eventually come as a result of the outlandish spending.
- Kilroy RobotoLv 61 decade ago
I agree with Jules. It wasn't very long ago Fox News, et al, were trying to tell us that debt is a GOOD thing for a country. Funny how their economic philosophy changed with the election.
- Anonymous1 decade ago
Depends on how you use the other $20,000 in debt. A good investment that would double that money would be great. Using it on random things that won't bring in more money later would be the most retarded thing ever...
In other words, what the current administration is doing is the most retarded thing ever...
- gone fishinLv 71 decade ago
Too late for your plan. The banks froze up and let the government take over the lending business.
- 45 autoLv 71 decade ago
Bo doesn't own the $ or has to pay it back and never will. It's called power of the pen.Logic is not part of the evasion when you have no accountability.The change they promised.