> stop spending money the government doesn't have
That shows quite the misconception about what "money" actually is.
That shows quite the misconception about what "money" actually is.
However, Argentina has runaway second order effects like inflation that must be dealt with, and we know that the only real way to deal with that is to depress the money supply. They will have to deal with the pain in order to repair the rest of the economy; it'll suck initially, but it'll improve outcomes everywhere else, and that should outweigh the effects of reduced government spending before too long.
There's no rational beyond blind faith here. Inflation will eventually stop, most likely, but thinking that “because of the sacrifice, things will go better in the end” is just magical thinking.
The economy doesn't give a shit about morality, and Germans are paying the price of this belief at this very moment: they put their moral take about debt (“Schuld”, which also means “guilt”) in their Constitution in 2009 and now they are stuck in a recession with no end in sight because the government cannot support their economy, and they also bullied the whole Europe into reducing their debt during the 2010s, which lead to catatonic growth level in the EU for a decade.
When economics policies are decided on a moral basis with religious-inspired arguments it leads to disaster (and it's true no matter what moral values are driving it: Mao starved his population for the exact same reason, even though the moral values that inspired his policies weren't the same).
The literal thing that happens is your country starts spending a greater and greater proportion of revenue servicing its debt (and eventually defaults), but this is less snappy to say.
[1] https://eh.net/encyclopedia/the-american-economy-during-worl...
I do agree that the relative value of the US economy shot up directly due to the destruction the war brought to European, Chinese, Japanese, and USSR industry and populations - so if you were discussing things in this sense, I can agree.
All that knowledge and redirected output ended up being extremely profitable once it could be used for civilians instead of the military when the war ended.
There's no need to adhere to a particular economic theory (I'm not particularly familiar with MMT) to realize that, at societies scale, money isn't some kind of scarce commodity.
[0] Unless you believe in MMT
> stop spending money the government doesn't have
Which has nothing to do with your response.
I think simplistic statements "government should not spend money it doesn't have" or "government should stop spending so much money" are all just the normal average person's way of trying to phrase this fundamental economic truth that anyone with a working brain can intuit.
It's obvious that governments cannot just spend any arbitrary large amount of money without consequence.
It's also obvious to anyone, that just like eating too many calories, it's much easier to overspend than to underspend.
So constant calls for governments to go on monetary diets and "make better food choices" are clearly warranted.
There Is Always a Well-Known Solution to Every Human Problem—Neat, Plausible, and Wrong
> It's also obvious to anyone, that just like eating too many calories, it's much eadier to overspend than to underspend.
You accidentally came up with the best possible illustration for the topic, and it's a really good illustration that actually goes against your argument:
- If you eat too much, you'll get fat and unhealthy.
- If you eat too little, you'll die from starvation.
And you're right, it's exactly the same for government spending: if the government spends too much, it's not good, but if it's spends too little the economy's dead.
Or does that already exist, I just don't know it?
Maybe it's not just one-dimensional though, i.e., it could matter where exactly spending occurs.
It's pretty obvious that some uses of money are more useful than others - if the state spent large amounts of money on buying snow and storing it in the sun, that's not going to have the same kind of effect as spending the exact same amount of money on building new roads. But beyond obviously silly examples, no one can really agree on even the basics of the effects of government spending in other areas.
For example, a question like "if the government pays very large pensions and social aids, does that increase the economy as much as spending the same amount of money on subsidizing private business?" is extremely divisive in economic circles - with opposing schools of economics claiming opposite results as the "obvious scientific answer".
Also I'd say the balanced budget "extreme" is more directly analogous to maintaining a balance of calories in versus out, not starvation.
I would go into more depth, but I find there are a lot of people that just fundamentally have different views on economics XD
Germany put it recently into their constitution that new debt is strictly limited, literally called the "debt brake". That overlooks all the nuances you just explained and in the worst case can cripple the German economy. German politics is full of folks demanding the "black zero", meaning essentially no (new) state debt. It's the literal sense, not the metaphorical sense that you are describing. And people buy it, since that's how their household economy works too. They even have a metaphor for that ("schwäbische hausfrau").
It's terrible. The debt brake is just as bad for their economy as the "rent lid" that's very popular among the German left which is crippling their housing sector.