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Why do the uneducated say you can't spend your way out of a debt?

True if you are buying things that won't make you any money you will go belly up. But if you are buying things that will give you a return on your money you will eventually pay off your debts and become profitable. The president wants to run up debt on things that are going to create cash flow but the naysayers just don't get it.

Update:

Robin, I guess you don't understand that people who are working pay taxes and buy things from others who pay taxes and then may have to hire a few others who will buy things and pay taxes....

Update 2:

piratavi, thats a sure recipe to stay broke.

Update 3:

No sense reply to all of you. you just don't get it. Maybe after we dig out of this hole you will give credit where credi...., Nah who am i kidding.

Update 4:

smart bussinesses don't borrow to expand? what planet do you live on. noone spends their own money. If I can borrow X amount and my profit from the investment is going to pay off the debt and put money in my pocket I'd be a dumbazz to pass that up. But the average person thinks that you cant spend your way out of debt.

Update 5:

can't sevice debt with minimal cash flow.

You have to generate some revenue. Jobs create revenue and cash flow which creates revunue and cash flow.....

Update 6:

Jacob W, you sound just like Eric Cantor or Boenher. we have tried Tinkle down economics and all we have got is pissed off and pissed on.

Update 7:

with the exception of Lauralor you people have no vision.

12 Answers

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  • Anonymous
    1 decade ago
    Favorite Answer

    Because not everyone has studied economics and so have a poor understanding of what he's trying to do?

    It is risky though, yes it could work but it could also fail miserably. Whether it works or not though, it won't happen straight away and a lot of people seem to want the economy to be fixed in a week.

  • 1 decade ago

    There is nothing about building roads, bridges, museums, monorails or anything else that the "stimulus" is being spent on that has a chance in hell of creating a positive cash flow. The reason is because we are spending borrowed money on them. We will still be servicing that debt long after those projects start costing more money in maintenance.

    I do not see why everyone with an opinion believes everyone else with a different opinion is "uneducated". It is a clear and obvious expression of ignorance, in my opinion.

    Whomever is giving you such an "education" is either seriously misinformed or deliberately misleading you. When you break down the speding in the "stimulus package" it all comes down to expensive projects of questionable value, temporary employment and a massive amount of interest payments and inflation. I put the word "stimulus" in quotes because it is not really a stimulus at all. Stimulus spending, such as you describe, must be done quickly to have any effect. Most of the spending in this bill does not even begin until late in 2010. That is not helping stimulate anything.

    The correct move would be to cut taxes, fees and regulations that inhibit investment. Cut them steeply and temporarily. That will motivate the private investors to break out there wallets and take advantage of the opportunity to make more money. What our current approach is doing is causing confusion and uncertanty. Both are deadly to investors.

    Please, get your faith away from the Federal Govenment, its temporary help and permanant bureaucrats. Nothing the Federal Government ever does is efficient, correct or frugal. Do you know of a single private company that increases its budget by 8% per year? Trust me, I am in the private sector. We do no such thing. We are all about reducing waste not encouraging it.

    Put your faith in the people.

    EDIT- just making people work is no solution. Diggin holes just to fill them in again and collect a paycheck is a waste. You must have people earn money while being PRODUCTIVE. That is the key difference between Capitalism and Socialism. Capitalism is productive and generates more wealth. Socialism simply moves existing wealth around generating nothing of value.

    Edit- you seem to have plenty of little insulting quips but nothing I have said is untrue. You can believe trickle down economics did not work but I was actually an adult trying to make a living all through the Carter administration. Reagan was a Godsend. I was a union member and later a union president back then. I was an eyewitness to history. Everyone prospered.

    *

  • Sathi
    Lv 7
    1 decade ago

    Hmmm...all these naysayers. And yet THEY don't get it, right?

    Is this how you look at all people who don't agree with you? They're uneducated? Try to be a little more pompous.

    The president wants to run up a debt, yes. But there is no guarantee of any return. Nobody in their right mind can say that. How is rebuilding infrastructure going to increase cash flow? It creates temporary jobs, for sure. Beyond that...?

  • 1 decade ago

    Government doesn't produce anything. Good businesses produce something, make money, and then reinvest their capital. The government takes from one and gives to another to spend. That is a zero sum game.

    Also solid businesses do not go into debt to expand. If you watch the market companies that have to borrow to grow are valued lower - not higher.

    Also look at individuals. The more debt they have the lower their fico score. You can not spend your way out of debt.

    ---------------------

    You are wrong. Solid businesses do not go into debt. They find investors and spread the risk. Would you rather buy stock in a company that was growing at 10% with debt or without?

    Notice the massive economic growth after WW2? AFTER the government quit spending (oh I mean investing), why did the economy grow after spending STOPPED?

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  • zzone
    Lv 7
    1 decade ago

    Wrong, and speaking of the uneducated, apparently that is what BO is, since no one can find his birth certifiate, his college records, selective service records, wonder where he got that fake one, from a dumpster. His non-educated is showing, big time. He is a idiot in a suit, proped up by the liberal media and foreign donors.

    Which makes us wonder: Is it just a Trojan horse for a massive tax hike on the rich, or for huge tax hikes on all Americans?

    Apparently, the White House doesn't realize that taxes on the rich and corporations are ultimately paid by the poor and the middle-class through higher prices, lower incomes and fewer jobs.

    Wealthy Americans won't sit still and let their wealth and incomes be stripped from them. They'll find ways to avoid the greedy hand of government picking their pockets.

    As it stands now, close to 50% of income earners have no federal income tax liability and as such, what do they care about rising income taxes? In other words, once legalized theft begins, it becomes too costly to remain moral and self-sufficient. You might as well join in the looting, including the current looting in the name of stimulating the economy.

    I am all too afraid that a historian, a hundred years from now, will footnote America as a historical curiosity where people once enjoyed private property rights and limited government, but it all returned to mankind's normal state of affairs — arbitrary abuse and control by the powerful elite.

  • Anonymous
    1 decade ago

    It is not just the uneducated saying that. Investing in capital for business to make an increased profit is good business, but the government is not a business. Increasing taxes and increasing interest and principle payments on deficits does not help us everyday Americans, it just enables the government to grow ever larger and more inefficient.

    Source(s): Graduated with a Bachelors.
  • Anonymous
    1 decade ago

    The government isn't buying anything that will make them any money. They are not buying anything that will give them a return on their dollar. That is called investing not spending. Name one country since the dawn of history who spent their way out of debt successfully.

  • Anonymous
    1 decade ago

    they cant understand that macro economics and micro economics are different

    nor do they know what the multiplier effect is

    they are historically ignorant , what they suggest was tried in the depression and it just drove the country deeper into depression

    until FDR and the new deal used Keynesian economics to spend our way out of depression

  • 1 decade ago

    Well maybe if they were giving companies incentives to open up factories here we'd have some job creation, so then some of us naysayers will have money to spend. You can't spend what you don't have.....duh!

  • Anonymous
    1 decade ago

    what is the pres spending money on that will create a cash flow

    as best as i can tell he is just handing it out to his friends

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