IBEW document: Do large deficits mean high unemployment?

[Renew Deal]

It appears that way. Have a look.

http://www.ibew.org/Rev042304-JustFacts.pdf

[serryjw]

1. Sure......

It cost more money for busineses to borrow so they can't expand..and have no reason to hire new people....and I failed ECON 101

[rapier]

3. notes

In the face of the mounting deficts, interest rates reached a 50 year lows. While they have risin some they are still ultra low. This pretty much destroys your crowding out theory, ie. government borrowing raises interst rates.

There is so much going on here but bussiness borrowing for expansion is today an almost invisible portion of the overall credit market. MUCH MUCH MUCH MUCH more borrowing is being done for speculative purposes in the financial and real estate sectors and of course for pure non productive consumption.

[rapier]

2. notes

Your assuming a causal relationship wherein deficits cause unemployment but in fact the causality is the other way around. Higher unemployment is a signal of a weaker economy and thus larger deficits.

As good Democrats may recall it was govenment spending for the New Deal that was seen as a partial cure to the depresssion and this so called "Keynesian" solution, govenment borrowing and spending to icrease demand and goose the economy has ever since been embraced by all parties, even this crew.

That $430 some billion defict this year isn't just an accident. It is in fact a policy, never admitted to of course but a policy to increase overall demand.

Lower tax receipts from the tax cuts and slow economy boosted the defict in 01 to 03 but don't let that lead you to belive that those in the know in the administration don't understand fully that their out of control spending is being done for Keynesian reasons.