Every version of a balanced budget amendment I've seen includes methods to institute deficit spending in an emergency. It wouldn't be an issue.
Yes, and the amendments I've seen have included a grace period to bring the budget into balance before the amendment's requirements kick in.We need to run a deficit every year.
In 2024, our deficit was $1.8 trillion, 6.4% of our GDP. Meanwhile, the economy grew by 2.8%. If you lop that $1.8 trillion off the top of GDP, our economy shrinks. Recession. And that's not even trying to calculate the secondary effects of that spending, which would be a further loss.
Yes, and the amendments I've seen have included a grace period to bring the budget into balance before the amendment's requirements kick in.
This has nothing to do with our trade deficit and everything to do with the federal government spending more money than it receives in revenue year after year. So each year our total debt goes up, and so does our interest payments.We have a structural imbalance that necessitates a federal deficit every year. Unless we become net exporters (highly unlikely), there will always be a trade deficit. Plus, we net save some of our income every year. Both of those things work against demand, and if you don't fill that demand gap, we get a recession. Growth alone won't cut it.
Every version of a balanced budget amendment I've seen includes methods to institute deficit spending in an emergency. It wouldn't be an issue.
This has nothing to do with our trade deficit and everything to do with the federal government spending more money than it receives in revenue year after year. So each year our total debt goes up, and so does our interest payments.
Depending on the version of the balanced budget amendment. Generally, some kind of super-majority is required for deficit spending. So imagine trying to get 2/3 of Congress to sign off on business as usual. Many of them wouldn't have any problem explaining that to their voters. Others? Not so much. You could even end up with a number of legislators that are willing to join the rest of the 2/3 voting for deficit spending, but only if each year's budget is smaller than the previous year so that eventually we would reach balance.So I guess the deficit spending would continue.
Yes, which means we have ever more dollars chasing the same amount of goods, which means inflation--which is why inflation is a hidden tax.Every cent that the government spends is income to some American. Cutting government spending is like GM deciding that it's going to make way fewer cars, regardless of the demand. People lose jobs, income goes down. Interest payments go to bondholders, mostly Americans. This is not a debt owed by Americans that has to be paid off somewhere down the line, this is a government creating and spending its own currency. When they do that, we get the money, we don't owe anything.
I understand that this isn't intuitive stuff, and we have been told for years that the national debt is a big ol' boogeyman just waiting to pounce on us, but the reality is nothing like that.
Yes, which means we have ever more dollars chasing the same amount of goods, which means inflation--which is why inflation is a hidden tax.
Your incredibly stupid thinking has brought us to a financial situation in which our national debt, including unfunded debt liabilities, is in excess of $ 136 TRILLION, with annual interest payments of about $ 1 TRILLION.
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A long history of low inflation? For much of our history, the value of the dollar actually held steady. Yes, there were times of inflation, but there were also times of deflation, with the result that 120 years after the founding of the United States (1789), the dollar's value was only 3.3% lower--and a decade earlier, it was actually 6% higher. By 1919 the dollar had lost 49.1% of its value, true, but we'd just finished fighting a war, and wars do that. A decade later, on the eve of the Great Depression, the dollar had actually regained a smidgeon of value, to 51.5%, so no inflation there. The Great Depression hit, and the dollar's value actually recovered substantially, up to 63.3% of its value. Throughout that total period, the average inflation rate had been only 0.31%.We deficit spend almost every year. We have a long history of increasing "debt" and also a long history of low inflation. They aren't connected.
A long history of low inflation? For much of our history, the value of the dollar actually held steady. Yes, there were times of inflation, but there were also times of deflation, with the result that 120 years after the founding of the United States (1789), the dollar's value was only 3.3% lower--and a decade earlier, it was actually 6% higher. By 1919 the dollar had lost 49.1% of its value, true, but we'd just finished fighting a war, and wars do that. A decade later, on the eve of the Great Depression, the dollar had actually regained a smidgeon of value, to 51.5%, so no inflation there. The Great Depression hit, and the dollar's value actually recovered substantially, up to 63.3% of its value. Throughout that total period, the average inflation rate had been only 0.31%.
Then we got WWII, and the devaluation of the dollar began to pick up steam, dropping to 37% in 1949, 30.2% in 1959, 24% in 1969. Over that time, the average yearly inflation rate was 0.72%. And then it took off like a rocket, so that over the course of my lifetime (1964 to 2024), the dollar has lost 90.1% of its value, with an average yearly inflation rate of 3.93%. That is not a "long history of low inflation."
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The point of adding context is just that--context. As in, for a good half of our national history, the average change in to value of the dollar was close to zero.Why not go all the way back to Roman times and compare the value of their coins to Italy's present-day coin, the euro? How many clay pots of millet will an hour of your labor buy today, compared to 100 A.D.?
What do you think the last two graphs were? Almost, at least. If you want to go with the period from 1971 to now, here it is, the same graphs with seven years lopped off:Shorten that graph to just the fiat era, over a half-century of data. Growing debt, low inflation. There is no correlation.
The point of adding context is just that--context. As in, for a good half of our national history, the average change in to value of the dollar was close to zero.
What do you think the last two graphs were? Almost, at least. If you want to go with the period from 1971 to now, here it is, the same graphs with seven years lopped off:
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Over that period, the government, with an average inflation rate of 3.91%, has reduced the value of the dollar by 87.4%.
You know what the proper inflation rate is? Zero!
Now, back to the subject. I already explained how deficit spending doesn't increase the number of dollars. Are you still blaming it for inflation? What about a bunch of other real factors that affect prices, like oil embargoes, pandemics, supply chain problems, and regular old corporate pricing power?
I have not seen the text but as long as it goes through the process of adding an amendment to the constitution, I'm fine because it won't make it. My problem is with the idea of calling a constitutional convention. That would be foolhardy and dangerous.When you finance deficit spending with new printing press Federal Reserve Notes, what is that called?
BTW, the subject of the thread is about the Balanced Budget Amendment DeSantis supports. Have you ever seen its actual text?
When you finance deficit spending with new printing press Federal Reserve Notes, what is that called?
BTW, the subject of the thread is about the Balanced Budget Amendment DeSantis supports. Have you ever seen its actual text?
Have you not read anything I've written here? Deficit spending, taken with bond issuance, adds zero dollars to the economy. And it's always done with bond issuance.
If you are referring to "money printing," that has a definition. It's when the CB buys bonds to increase the number of reserves. Adjusting the number of reserves is a normal function of the central bank, and it is not connected with deficit spending. It's also an even exchange, reserves for bonds. The central bank is a bank - they don't do the spending.
I just read a summary. It refers to balancing the federal budget, and that's all I need to know. It's a terrible idea, but a politically popular idea among people who don't understand federal finance or economics.
When you finance deficit spending with new printing press Federal Reserve Notes, what is that called?
My question asked if you have seen the actual text of the balanced budget amendment which DeSantis supports. I think he does not support any particular balanced budget amendment and is more interested in convening a constitutional convention. The balanced budget amendment may only be a gimmick to get support to convene a convention.
Crazy assumption.DeSantis has talked about balanced budget amendments before. One must assume that if there is an effort to convene a convention about a balanced budget amendment, then they are there to try and pass a balanced budget amendment.
Well when Obama STOPPED even trying to Propose a Balanced budget, and there were no legal check to prevent that , I would think this is a good idea, to Save America from corrupt politicians from legally destroying American financially !.
See: Governors press for a Balanced Budget Amendment
"DeSantis told reporters during the joint Idaho press conference:
“I am convinced that you are not going to have Congress all of a sudden change its behavior for the long term. I think the reason we’ve gotten into this with respect to fiscal is because there are certain incentives for the people that are in Washington to behave the way they do. And we need to change those incentives.”
He continued:
“If Idaho and Montana join the fight, that gets us to 29 there’s a couple other states that are on the precipice as well. You need 34 states to trigger Article Five, where you would actually write an amendment and then eventually send it to the states for ratification."
I wonder why Governor DeSantis is so interested in triggering Article V, calling for a constitutional convention with the dangers involved, to write a balanced budget amendment, when our Founders provided a specific procedure to deal with any deficits created by Congress's borrowing during the course of a fiscal year. That procedure is found in the Fair Share Balanced Budget Amendment
Perhaps Ron DeSantis ought to defend our Founder's remedy, which would create a very real moment of accountability for each State's Congressional Delegation if they should borrow during the course of a fiscal year, which would then require them to bring home a bill to their own State Legislature to pay an apportioned share out of their own State Treasury to extinguish the deficit caused by Congress borrowing.
Keep in mind that every single balanced budget amendment produced since the 1980s, to the best of my knowledge and excluding the Fair Share Balanced Budget Amendment, would actually make it constitutional for Congress to not balance the budget on an annual basis. Our Founder's remedy, already in our Constitution, would actually do what Ron DeSantis indicates his goal is. So, why has he not mentioned our Founder's procedure to deal with a deficit caused by Congress's borrowing?
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JWK
“I have also repeatedly given my opinion that there is no effective way to limit or muzzle the actions of a Constitutional Convention. The Convention could make its own rules and set its own agenda. Congress might try to limit the Convention to one amendment or to one issue, but there is no way to assure that the Convention would obey. After a Convention is convened, it will be too late to stop the Convention if we don’t like the agenda. The meeting in 1787 ignored the limit placed by the Confederation Congress ‘for the sole and express purpose.’ “ Chief Justice, Warren Burger
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