Folks, was the Clinton surplus a myth or was it real? I hear we were on track

[Mattias]

11. Real and nomninall money

It is basically a GOP trick (I hope) or total lack of education in economics (which would be sad). Basically there are two deficits/surpluses. The nominal and the real.
A nominal deficit means that in money you spend more than you receive. This is a meaningless way to measure any type of economic action.
The real deficit is what matters.
To make it simple, suppose you are the premier in an economy with a GDP of 1 000 billion. Suppose the national debt is 500 billion. This gives you an economy with a debt to GDP of 50 %.
Assume that over a ten year period this economy doubles in size in real terms and experience a consistent inflation of 5 % per annum. This will give the economy a nominal GDP of 3 628 at the end of the period.
Should the budget be balanced over this period the debt will still be 500 billion but its share of GDP will have been reduced to less than 14 % of GDP. So without paying a cent the debt has been reduced by 36 % of GDP. This is assuming the budget is fully neutral. Should the revenue exceed the expenses and assuming the budget stays neutral. Actual repayments would reduce it even more. Should your government wish to expand you could take on 1 314 billion more in debt and still be owing 50 % of GDP.
Both Great Britain who owed 214 % of GDP and the United States who owed 129 % after WWII choose to let inflation and growth repay their public debt. No money was ever used to repay debt, interest was paid in order and growth and inflation took care of the rest. The first time debt increased in real terms was paradoxally when Prime minister Thatcher and President Reagan won their respective elections.
If a county owes 15 gazillions fake dollar and has a GDP of 1 gazillions of fake dollar it is in trouble. If a country owes 15 gazillions fake dollar and has a GDP of 10 000 gazillions fake dollars its biggest trouble is not debt.
GOP has a problem differing between real and nominal money. This makes the implication that they if they have economist should fire them and if they don’t should employ some. A Candidate whose one election promise is to fix the economy cannot be a person that skipped econ 101