Tuesday, November 12, 2013

Why “Deficits” Don’t Always Matter:

12 November 2013
As “Fiscal Conservatives,” we take issue with how the “Conservative” side of American politics looks at deficit spending and debt. Here’s why:

Every year, our family takes in a certain amount of money as “income.” A portion of that income, we use to make “capital improvements” and “investments.”

A portion of funds employed for capital investments constitutes down-payments for new real estate properties, for which we take out mortgages.

If One Were to Look at selective parts of our family balance sheet, one might see:

Deficit Spending: We have added 80% of “spending” in relation to the 20% down-payment

Increasing Debt: We have added that 80% of “debt” to the balance sheet. This debt addition may be offset by total reduction of principal on all mortgages.

Over more than three decades of such “deficit spending,” our debt-to-equity ratio is less than 50%.

Any political “Conservative” might say that we are “spending” ourselves to ruin, and that we risk leaving a mountain of debt to our children and grandchildren.

Our children don’t mind.

(($; -)}
[NOTE: The above post on “deficit spending” was prompted by our reading of Why The Most Important Budget Event Of The Year Has Had No Impact, which was posted earlier today by Stan Collender, at “StanCollender’s Capital Gains and Games.

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