How much of a budget deficit is too much?
What signs would indicate that a budget deficit is too big?
- Cold Hard FactLv 61 decade agoFavorite Answer
While a deficit is only the budget shortfall for a year, the debt is the total aggregate of the historical deficits and surpluses. There is an extensive historical record of what happens to countries that amass too much debt.
In general, if the debt gets too big, the countries just try to print money to pay for it. This happened in Argentina during the 80s, Romania in the 90s, Zimbabwe last year, but most notably Germany (Wiemar Republic) in 1923. The problem is that printing money does not create wealth- it devalues all of the wealth that is already in existence. This is called inflation.
To answer your question- there are many signs that a deficit is too big, but one of the best indicators is the price of gold. The price of gold is always a measure of inflation. Since one ounce of gold is always one ounce of gold, the fluctuation in the price is mainly a result of the change in value of the currency- not a change in the value of gold.
And look at the price of gold today- new highs virtually every day. It is no coincidence that the US is the largest debtor nation on Earth.
- John HLv 71 decade ago
Any deficit at all is too much. Especially when the national debt is at the level it is already.Source(s): Common sense
- Anonymous1 decade ago
In my opinion that would be the rate of national debt and also the rate of unemployment.
Still a sure sign would be the economical panic and the taxes rising, because usually the governments try to cover their mess imposing taxes instead of stimulating economical growth.Source(s): the current world economics situation
- stiritup05Lv 41 decade ago
Think about your personal situation.
How much do you have to be overdrawn in your checking account until it bothers you?
Deficit = deficient = not enough.
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- Anonymous1 decade ago
IT IS ALREADY WHY TOO BIG. RIGHT NOW THE GOVERNMENT CANNOT GET ENOUGH FUNDS FOR ITS SPENDING THROUGH BOTH TAXES AND BORROWING AND IS PRINTING MONEY TO MAKE UP THE DIFFERENCE AND THAT IS ONLY GOING TO GET WORSE.
AT SOME POINT IT WILL GET SO BAD OUR MONEY WILL BECOME WORTHLES AND THAT IS WHEN YOU WILL SEE HYPERINFLATION.
- Dave87gnLv 71 decade ago
"ronald reagan proved that deficits dont matter"
actually, we've run defiicts so long that the debt is too high to ever pay down..I expect the whole thing to crash
- monkeykickstandLv 61 decade ago
does size really matter?