Fifteen Twenty Percent discussed on Radical Personal Finance


From your great great grandparents asking for the debt that the government took on in the beginning of the century i would say yes in this way that a significant portion of the federal expenditure i don't have the number in front of me but i would say what fifteen twenty percent of the of the federal expenditures currently spent on interest no it'd be less than that interest on the federal debt right and that debt has accumulated since world war two that so we are still currently paying interest they pay interest on nobody's collected because what is government debt it's it's assets of most of us in other words that interest flows right back into the economy and it becomes income and these are always have to look at who's on the other side of the balance sheet right government debt our household assets and what is creating that debt each year because one of the things people talking about you need to have a balanced budget right well the government can set what they wanna spend they really don't have control over the revenue because that is determined by the visions of households and businesses how much they want to save and let me let me just give brief example just think of if businesses and households decide that they want to save more that means they spend less if they spend less and they're buying less from other households and businesses which means their income drops which ultimately means that there's less tax revenue because if businesses if people are trying to save more and businesses are trying to save more by spending less than other businesses aren't gonna have as much income people aren't gonna have many jobs they'll be less tax revenue and then naturally puts the government into deficit position even if the budget was balanced at the beginning of the year we're going to spend whatever five trillion here and we hope to get five trillion in revenue as soon as the household and business sector decide they don't want to spend as much then the revenue drops the tax revenue and that's why we naturally bigger deficits during times of recession because of unemployment.

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