How do you grow an economy to help get it out of debt?

[ksen]

By paying workers less, slashing retirement benefits, putting up obstacles to organizing labor, making it harder to get a college education and closing schools . . . obviously.

Puerto Rico Fiscal and Economic Growth Plan

 

[Loren Pechtel]

By paying workers less, slashing retirement benefits, putting up obstacles to organizing labor, making it harder to get a college education and closing schools . . . obviously.

Puerto Rico Fiscal and Economic Growth Plan

Doing what they were doing certainly wasn't working. I don't know if their answer is right, something has to change.

 

[dismal]

If racking up more debt with deficit spending was the answer Puerto Rico would be a thriving economy now, wouldn't it?

I guess the practical problem now is what to do when people stop being willing to lend you money before your massive deficit spending has created economic nirvana.

 

[ksen]

Another practical problem would be reigning in creditors' expectations that they should get paid everything back after obviously lending someone too much money.

 

[dismal]

Another practical problem would be reigning in creditors' expectations that they should get paid everything back after obviously lending someone too much money.

This kind of happens on its own. When the expectations becomes prevalent a borrower has too much debt, said debt starts trading for a fraction of face value. Lenders lose money on what they have lent and generally become unwilling to lend more.

 

[Nice Squirrel]

Another practical problem would be reigning in creditors' expectations that they should get paid everything back after obviously lending someone too much money in an absurdly short amount of time.

FIFY

 

[ksen]

Another practical problem would be reigning in creditors' expectations that they should get paid everything back after obviously lending someone too much money.

This kind of happens on its own. When the expectations becomes prevalent a borrower has too much debt, said debt starts trading for a fraction of face value. Lenders lose money on what they have lent and generally become unwilling to lend more.

It should happen on its own, yes. We'll see what Puerto Rico's creditors have to say after they have a chance to look at PR's proposal.

Another problem I see is treating State debt like private/corporate debt. They are not the same except maybe superficially. If Puerto Rico were a State of the US or a sovereign nation they wouldn't be in this predicament. That they're some in-between thing is hurting them more than it's helping them right now.

 

[skepticalbip]

I am constantly amazed that political leaders understand that a family can not continually spend more than it earns without falling into serious financial problem however that reasoning completely escapes them when applied to countries. They only need to follow the advice they would give to a family that was in debt - tighten your belt, stop spending more than you earn, work out a repayment plan with creditors so you don't destroy your ability to borrow in emergencies.

 

[ksen]

I am constantly amazed that otherwise smart people actually think government is equivalent to a household or a business.

eta: https://www.google.com/search?newwi...0....0...1c.1.64.hp..24.23.5162.0.hknQdBenQ5o

 

[skepticalbip]

I am constantly amazed that otherwise smart people actually think government is equivalent to a household or a business.

eta: https://www.google.com/search?newwi...0....0...1c.1.64.hp..24.23.5162.0.hknQdBenQ5o

Economic laws apply on any scale. If a system is set up where expenditures exceed earnings over the long term then it will fail.

 

[ksen]

Sovereign state budgets are not equivalent to a household or a business budget.

 

[dismal]

Sovereign state budgets are not equivalent to a household or a business budget.

In what relevant way are they different?

If they take in less money than they spend something must make up the difference, no?

 

[skepticalbip]

Sovereign state budgets are not equivalent to a household or a business budget.

That is a cute claim. Explain how that allows a violation of simple math.

 

[ksen]

Sovereign state budgets are not equivalent to a household or a business budget.

In what relevant way are they different?

1. The ability to print money
2. The ability to tax

There's two relevant differences.

I'll throw in a third for free:

3. State's are effectively immortal

 

[ksen]

Sovereign state budgets are not equivalent to a household or a business budget.

That is a cute claim. Explain how that allows a violation of simple math.

I never said States are able to violate simple math.

 

[skepticalbip]

That is a cute claim. Explain how that allows a violation of simple math.

I never said States are able to violate simple math.

You did if your claim is that a state can continually spend more than it takes in.

 

[dismal]

In what relevant way are they different?

1. The ability to print money

Pretty sure Puerto Rico can't print money. So I guess they are not different in this respect. And this does not really change the fact that if they spend more money than they take in the difference must come from somewhere. This could be the somewhere.

2. The ability to tax

Puerto Rico can and does tax. This does not really change the fact that if they spend more money than they take in the difference must come from somewhere. This is part of the money they take in.

3. State's are effectively immortal

Try telling that to Yugoslavia.

And in any case, I don't see how it nullifies the fact that if they spend more money than they take in the difference must come from somewhere.

 

[ksen]

I never said States are able to violate simple math.

You did if your claim is that a state can continually spend more than it takes in.

That is not a violation of simple math.

 

[skepticalbip]

You did if your claim is that a state can continually spend more than it takes in.

That is not a violation of simple math.

If you really believe that then you have no understanding of math. I take it you aren't a math major.

ETA:
You don't happen to be one of the economic advisers for Greece are you?

 

[dismal]

That is not a violation of simple math.

If you really believe that then you have no understanding of math. I take it you aren't a math major.

ksen is a Subtraction Truther.

10-7=3 is just what they want you to believe!