Why do people promote the flawed "household" analogy with regard to federal spending?

The federal government is not constrained in its spending, and without a deficit our economy would crash. The household analogy is based on how things worked in the late 19th century; today the national government has no such limits.

So why confuse the public by perpetuating a myth?

10 Answers

  • 8 years ago
    Favorite Answer

    You must have over dosed on your Kool-Aid.

    You mean to say that if we had no debt and a balanced budget our economy would collapse?

    Tell me then, once the interest on our debt reaches the point where it consumes more than our revenues then what is your next step. The government would have only one option and that is to keep printing more and more money which then means that our dollar becomes more and more worthless. Maybe you want to take a look at the financial crisis in Argentina, in the 1990's when the peso had an exchange rate of 10,000 to the USD. If that isn't good enough take a look at Zimbabwe. I have a 1 trillion Zimbabwe dollar bill, it is worth about $0.35 in US dollars.

    The federal government is constrained in spending, it is just not as constrained as the normal house hold and that is only because the federal government has the power to keep increasing the limits on its credit card.

    I did a spread sheet on the national debt based on increases between 2000 and 2010, the rate of increase was 7.4% per year, I also did the same for revenues and interest on the date based on a 10 year average.

    Based on my forecast, our national debt would be what was forecast for the end of 2014, our revenues are on track but obviously interest is also ahead of schedule by 2 years.

    Using this forecast, interest will begin exceed revenues in 2032 but since I am already ahead of schedule one can only guess what it might be. I guess we will have to look to see when the national debt passes the $19.5 trillion mark, my forecast says the end of 2016 so that means we are only $3 trillion away. I am thinking we hit it much sooner than that

    @the one

    tell me, if money can not be printed ad naseum how the hell has the FED been buying our debt with QE1, 2, 3 etc.. etc.. They have to print it because it can not be spent without congressional approval.

  • Another Democrat proves it has less-than human brainpower.

    There is not a single thing you said there that's true, or even approximately so.

    Even when government "creates money," its value is ALWAYS sucked OUT of existing money in the economy.

    Therefore at a hypothetical absolute maximum, a LIMIT does indeed exist. "Printing infinite money" means the VALUE of that money becomes infinitely close to ZERO. TOTAL spending is indeed limited to the TOTAL value of "all of the production."

    "Without a deficit our economy would crash" absolutely CANNOT be true unless government existed BEFORE people began trading with each other; unless government itself CAUSES trade to exist. It's mind-bogglingly obvious to literally 100% of the fully human that we moved beyond "hunter-gatherer" before we ever formed governments and WAY before any government ever ran a deficit - thus what you claim is impossible. Further, ALL government spending - even "necessary" government spending - DEPRESSES the economy. No exception is possible. That's because ALL government spending REMOVES resources FROM the economy and re-allocates them in ways INFERIOR to the economy's preference. We know it's always inferior simply because "government" is a SUB-set of the population and therefore has LESS total knowledge about the aggregate wants and needs of "everyone" than "everyone" has. For "government spending" to HELP the economy, bureaucrats must have supernatural wisdom to know MORE than "everyone" knows about "everyone's" aggregate wants and needs.

    The "household analogy" is based on ARITHMETIC. Nothing more. Nothing less. Although all Democrats deny this is so, the fact is that arithmetic still applies when you're in government.

    Seriously; everything you said is based on an extremely childish understanding of government and the economy. The first step to your potential humanization is for you to confess that you believe what you posted ONLY because your owner told you so. Yes, I said "your owner." When someone can make you believe things ONLY because they said it - they own you.

  • Anonymous
    8 years ago

    The " let's run it like a business " analogy is flawed too

    Government can do things that business can't do such as making huge capital investments and waiting a generation or two for them to pay off

    If a family has money problem then they do three things concurrently ; cut spending , increase revenue by sell off assets and getting second jobs

    Government can only do two of the three ; although we bought AK we can't sell it nor can we sell any other US States and territories that are not part of the continental US

  • 4 years ago

    dazzling, yet i'm greater inspired with Dennis Kucinich's national Emergency Employment Defence Act that could Nationalise the Federal Reserve and produce it decrease than the administration of the U. S. Treasury.

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  • 8 years ago

    For being an unemployed dirtbag, you claim to be an expert in economics. Actually, you are just parroting moronic statements from other douchebags that have no idea what they are talking about. For the last time: Thom Hartmann is not a scholar, he is a college dropout.

  • 8 years ago

    So you think deficit spending won't affect our children? Nice delusion.

  • Anonymous
    8 years ago

    Because they actually believe that running a government is the same as their household budget.

  • Anonymous
    8 years ago

    Only myth is that the dollar can be printed ad naseum.

  • 8 years ago

    It's a good way to promote the Austerity agenda. It has no validity.

  • Anonymous
    8 years ago

    you are not an economist

    if i'm wrong, please tell us where and when you earned your MA in Economics.

    thank you.

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