Posts Tagged ‘Recessions’
Thursday, February 4th, 2010
While it is true that the net federal government debt rose from about $3 billion in 1939 to over $22 billion by 1975. In practice, it is common for budget deficits to be financed by a combination of borrowing and “printing,” a practice that can be economically beneficial as long as the “printing” of money is kept within reasonable limits.
Part B: The National Debt
We have seen that the use of government fiscal policy to stimulate the economy during recessions requires that the government borrow money (mostly through bond issues) in order to finance its budget deficits. The total amount of federal government debt thus incurred – the amount of money owed by the federal government – is called the “National Debt.” By 1983 the National Debt will amount to over $100 billion, or nearly $4000 for every man, woman, and child in Canada.
The National Debt has, over the years, been the subject of a great deal of misunderstandings, fears, myths and political hypocrisy. Many Canadians believe, for instance, that the National Debt is owed to other countries and that Canada may go bankrupt because of it. Both of these are myths. On the other hand, few Canadians appreciate the real dangers concerning the National Debt. We will examine first the myths, then the real dangers.
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Tags: Amount Of Money, Auto Finance, Bond Issues, Borrow Money, Budget Deficits, Canadians, Economy, Edmonton, Fears, Federal Government Debt, Fiscal Policy, Government Money, Hypocrisy, Keynesian Policies, Man Woman And Child, Misunderstandings, Money Owed, Myths, National Debt, Printing Money, Recessions, Woman And Child
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Monday, February 1st, 2010
This concern is often expressed in the words that “any business that ran that way would go broke.” Sometimes the reference is to government inefficiencies and waste, which no one condones, but often the reference is to budget deficits and the rising National Debt. However, the matter is not that simple. Most successful businesses accumulate not only productive assets but also more and more liabilities, or debt, reflecting the money that was borrowed to finance those assets. Businesses do not regard such a situation as bad management; indeed, the acquisition of the assets can be financially beneficial to the company by increasing its profitability.
Just as a growing economy requires more private productive assets, such as factories and equipment, it requires more social assets, such as roads, hospitals and schools. Both private and social assets are typically financed by borrowing, so that the debts of businesses and governments (as well as households) have risen. The simple fact that these debts have risen in no way proves mismanagement on the part of governments or businesses or households in general.
Another problem that contributes to misunderstandings concerning government deficits is that many people confuse a government budget deficit with business “loss.” Some types of government budgets lump together all spending – for “current” purposes such as payroll and “capital” purposes such as airports – so that, whenever social assets are bought or built, the government’s budget shows an excess of spending over the current year’s tax revenues, or a deficit. By contrast, a business’ income statement does not include “capital” expenditures, on items such as plant, as current expenses, and its balance sheet shows its assets as well as its liabilities (or debt). Governments’ budgets generally show the liabilities without showing the corresponding assets.
Furthermore, no business has the responsibility to prevent recessions in the economy, and deficit spending – financed by borrowing – is a proven method of fulfilling that responsibility. Rising unemployment gives the government the choice of either ignoring the problem or using deficit spending to combat it. Considering that the government is responsible for maintaining “full employment,” it could well be argued that good management sometimes requires the government to have budget deficits.
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Furnasman’s One Hour Heating & Air Conditioning serving the Winnipeg, Manitoba area providing expert service in heating, air conditioning, and air quality
…
www.furnasmansonehour.com/ – Cached –
Similar
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According to
FURNASMAN, one of Manitoba’s Leading
CBC Heat and Air Conditioning Company, “the key to a healthy and safety place is through integrated air
…
health.einnews.com/article.php?pid=69800 – Cached
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29 Jan 2010
… As the world evolves on a fast pace, air inside the house becomes unhealthy to individuals, especial to children.
www.wiredprnews.com/…/uv-light-furnace-filtration-–-guaranteed-cleaner-air_201001298272.html – Cached
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http://www.winnipegfreepress.com/breakingnews/Mike-Weir-bringing-Miracle-Golf-Drive-to-town-66378842.html.
Furnasman Winnipeg
CBC ·
Furnasman Winnipeg
CBC …
www.glendalegolfs.com/ – Cached –
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13 Dec 2009
… Furnasman Winnipeg One Hour Heating
CBC. Full story: Netscape. Posted By jebborte 21 hours, 31 minutes ago in Business & Finance My furnace
…
www.topix.com/ca/…/furnasman-winnipeg-one-hour-heating-cbc – Cached
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Complete address, phone and fax information for
Furnasman/union Energy Inc. Also see map, employee and sales information, plus products and services
…
www.profilecanada.com/companydetail.cfm?…Furnasmanunion… – Cached –
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14 Dec 2008
… The
CBC investigated these folks. You may want to check this out if
… call 3 places and
Furnasman’s ONE HOUR was the only place to get to
…
www.n49.ca/p/winnipeg…/furnasman…/1575_seel_ave – Cached –
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10 Dec 2009
… My furnace went out today, I called my local natural gas provider Centerpoint Energy. and i called and old favorite of the family
…
prop-w-a-mtc01.evip.aol.com/…/furnasman-winnipeg-one-hour-heating-cbc/ – Cached
-
Terry S Vostor Winnipeg
Furnasman http://www.furnasmansonehour.com
Furnasman New
CBC Homes http://www.
furnasman.ca Source: http://www.submityourarticle.com
…
www.submityourarticle.com/articles/easypublish.php?art_id… – Cached
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Tags: Bad Management, Budget Deficits, Business Income, Business Loss, Capital Expenditures, Capital Purposes, Government Budget Deficit, Government Budgets, Government Deficits, Government Failure, Inefficiencies, Mismanagement, Misunderstandings, National Debt, Page Rank, Productive Assets, Recessions, Simple Fact, Social Assets, Tax Revenues, Types Of Government
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Friday, January 22nd, 2010
This is a good question – how can deficits, which increase aggregate demand, contribute to economic stagnation? The problem concerning stagnation arises not on the demand side of the economy, but rather on the supply side. If large government budget deficits are financed by heavy borrowing by government, in competition with business borrowing, the result can be depressed capital investment by business.
Business investment spending could be depressed for two reasons. First, the excess demand for the limited volume of savings could drive interest considered appropriate to borrow to buy them and repay the loan in the future.
Another reason for federal government borrowing is to finance budget deficits to combat recessions. Thus, the federal government’s responsibility for minimizing the effects of recessions sometimes requires it to go into debt. Historically, another major reason for government borrowing and increases in the National Debt has been the financing of wartime expenditures. For example, the Second World War added over $10,000,000,000 to Canada’s National Debt.
Each of the above is generally considered to be a legitimate reason for borrowing by the government. However, ordinary operating expenses of the government, such as its payroll, should be paid for by tax revenues. It is not considered to be good financial practice to borrow (or even worse, print) money to cover operating expenses, or to avoid a necessary increase in taxes for political reasons, any more than it is considered appropriate for households to go into debt to pay their telephone or food bills.
Forex Learn
Winnipeg Auto Finance
http://www.forexforexforexforex.com
-
-
Furnasman’s One Hour Heating & Air Conditioning serving the Winnipeg, Manitoba area providing expert service in heating, air conditioning, and air quality
…
www.furnasmansonehour.com/ – Cached –
Similar
-
According to
FURNASMAN, one of Manitoba’s Leading
CBC Heat and Air Conditioning Company, “the key to a healthy and safety place is through integrated air
…
health.einnews.com/article.php?pid=69800 – Cached
-
29 Jan 2010
… As the world evolves on a fast pace, air inside the house becomes unhealthy to individuals, especial to children.
www.wiredprnews.com/…/uv-light-furnace-filtration-–-guaranteed-cleaner-air_201001298272.html – Cached
-
http://www.winnipegfreepress.com/breakingnews/Mike-Weir-bringing-Miracle-Golf-Drive-to-town-66378842.html.
Furnasman Winnipeg
CBC ·
Furnasman Winnipeg
CBC …
www.glendalegolfs.com/ – Cached –
Similar
-
13 Dec 2009
… Furnasman Winnipeg One Hour Heating
CBC. Full story: Netscape. Posted By jebborte 21 hours, 31 minutes ago in Business & Finance My furnace
…
www.topix.com/ca/…/furnasman-winnipeg-one-hour-heating-cbc – Cached
-
Complete address, phone and fax information for
Furnasman/union Energy Inc. Also see map, employee and sales information, plus products and services
…
www.profilecanada.com/companydetail.cfm?…Furnasmanunion… – Cached –
Similar
-
14 Dec 2008
… The
CBC investigated these folks. You may want to check this out if
… call 3 places and
Furnasman’s ONE HOUR was the only place to get to
…
www.n49.ca/p/winnipeg…/furnasman…/1575_seel_ave – Cached –
Similar
-
10 Dec 2009
… My furnace went out today, I called my local natural gas provider Centerpoint Energy. and i called and old favorite of the family
…
prop-w-a-mtc01.evip.aol.com/…/furnasman-winnipeg-one-hour-heating-cbc/ – Cached
-
Terry S Vostor Winnipeg
Furnasman http://www.furnasmansonehour.com
Furnasman New
CBC Homes http://www.
furnasman.ca Source: http://www.submityourarticle.com
…
www.submityourarticle.com/articles/easypublish.php?art_id… – Cached
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Tags: Aggregate Demand, Auto Finance, Business Business, Business Investment, Capital Investment, Cbc, Economic Stagnation, Economy, Excess Demand, Expenditures, Federal Government, Food Bills, Good Question, Government Budget Deficits, Households, Legitimate Reason, Manitoba Area, National Debt, Operating Expenses, Payroll, Quality Www, Recessions, Second World War, Tax Revenues, Winnipeg, Winnipeg Manitoba
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Saturday, January 2nd, 2010
For many years following the Great Depression of the 1930′s, the focus on economics was on recession, and the main concern of economic policy was to combat recession. The key elements of this elements were “Keynesian” fiscal policies, particularly budget deficits to boost aggregate demand and lift the economy out of recessions. Fiscal policy was regarded as the active ingredient of economic policy, whereas monetary policy was seen as playing a secondary role, attracting much less attention.
Since the early 1970′s, however, the importance attached to the money supply and to the Bank of Canada’s monetary policies has increased dramatically. This is because the most serious problem of this period has been severe inflation, associated with exceptionally rapid increases in the money supply. This has drawn critical attention to the Bank of Canada’s monetary policies, which its critics see as having caused severe inflation by allowing excessively rapid growth of the money supply. These critics are often called “monetarists,” and their theories “monetarism” – a term subject to varying interpretations. In its milder forms, it refers simply to an increased emphasis on controlling the growth of the money supply in order to restrain inflation. Its more extreme proponents insist that only excessive increases in the money supply cause inflation, that only curbs on money-supply growth can combat inflation, and that the government should never increase the money supply at rates above a specified limit.
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Tags: Active Ingredient, Aggregate Demand, Auto Finance, Bank Of Canada, Budget Deficits, Cause Inflation, Critical Attention, Curbs, Early 1970, Economic Policy, economics, Fiscal Policies, Fiscal Policy, Furnace Company, Great Depression, Life Concerns, Monetarists, Monetary Policies, Money Supply Growth, New Focus, Proponents, Rapid Increases, Recession, Recessions
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Friday, October 2nd, 2009
This concern is often expressed in the words that “any business that ran that way would go broke.” Sometimes the reference is to government inefficiencies and waste, which no one condones, but often the reference is to budget deficits and the rising National Debt. However, the matter is not that simple. Most successful businesses accumulate not only productive assets but also more and more liabilities, or debt, reflecting the money that was borrowed to finance those assets. Businesses do not regard such a situation as bad management; indeed, the acquisition of the assets can be financially beneficial to the company by increasing its profitability.
Just as growing economy requires more private productive assets, such as factories and equipment, it requires more social assets, such as roads, hospitals and schools. Both private and social assets are typically financed by borrowing, so that the debts of businesses and governments (as well as households) have risen. The simple fact that these debts have risen in no way proves mismanagement on the part of governments or businesses or household in general.
Another problem that contributes to misunderstandings concerning government deficits is that many people confuse a government budget deficit with business “loss.” Some types of government budgets lump together all spending – for “current” purposes such as payroll and “capital” purposes such as airports - so that, whenever social assets are bought or built, the government’s budget shows an excess of spending over the current year’s tax revenues, or a deficit. By contrast, a business’ income statement does not include “capital” expenditures, on items such as plant, as current expenses, and its balance sheet shows its assets as well as its liabilities (or debt). Government’s budgets generally show the liabilities without showing the corresponding assets.
Furthermore, no business has the responsibility to prevent recessions in the economy, and deficit spending - financed by borrowing – is a proven method of fulfilling that responsibility. Rising unemployment gives the government the choice of either ignoring the problem or using deficit spending to combat it. Considering that the government is responsible for maintaining “full employment” It could well be argued that good management sometimes requires the government to have budget deficits.
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Tags: Bad Management, Budget Deficits, Business Income, Business Loss, Capital Expenditures, Capital Purposes, Debt Government, Government Budget Deficit, Government Budgets, Government Deficits, Government Failure, Inefficiencies, Mismanagement, Misunderstandings, National Debt, Productive Assets, Recessions, Simple Fact, Social Assets, Types Of Government
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Wednesday, September 23rd, 2009
One reason for government borrowing is to finance the purchases of “social assets,” such as roads, hospitals, schools, public buildings and airports. Since these assets are too expensive to be paid out of the current year’s tax revenues, the government borrows the money to pay for them – just as households borrow to buy cars and houses, and businesses go into debt to purchase capital equipment or build facilities that are too costly to pay for out of current income. In each of these examples, the benefits of the asset purchased will be received over a period of years in the future, so it is considered appropriate to borrow to buy them and repay the loan in the future.
Another reason for federal government borrowing is to finance budget deficits to combat recessions. Thus, the federal government’s responsibility for minimizing the effects of recessions sometimes requires it to go into debt. Historically, another major reason for government borrowing and increases in the National Debt has been the financing of wartime expenditures. For example, the Second World War added over $10,000,000,000 to Canada’s National Debt.
Each of the above is generally considered to be a legitimate reason for borrowing by the government. However, ordinary operating expenses of the government,such as its payroll, should be paid for by tax revenues. It is not considered to be good financial practice to borrow (or even worse, print) money to cover operating expenses, or to avoid a necessary increase in taxes for political reasons, any more than it is considered appropriate for households to go into debt to pay their telephone or food bills.
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Tags: Airports, Auto Financing, Borrow Money, Budget Deficits, Buy Cars, Credit Auto, Edmonton Alberta, Expenditures, Federal Government, Federal Money, Food Bills, Fort Mcmurray, Government Money, Hospitals, Households, Legitimate Reason, National Debt, Operating Expenses, Payroll, Public Buildings, Recessions, Second World War, Social Assets, Tax Revenues
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