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  • nocompetitor nocompetitor May 14, 2005 2:44 PM Flag

    Is PRZ a Ponzi Game?

    Lib,

    Interesting post as always. Like you, I hate debt. I disagree, however, that the massive debt during the Reagan years "had no real negative impact." IMO, that debt ultimately cost the elder Bush his re-election. Elder Bush was forced to go against his own infamous promise, "Read my lips....", in an effort to reduce the debt. But it was too little and too late. The country slipped into recession in time to elect Clinton. ("It's the economy, stupid!")

    The thing about Government debt is that there is often a long lag between its creation and its effect on the economy. So one President/Congress gets stuck with (or the benefit of) the handiwork of its predecessors. It's as if someone loaned me a million bucks and I could repay it over 10 years. I might have one great party in the first year (all the buds invited, of course!), but once the money ran out, the repayment period would be painful. If I invested wisely instead, the repayment might not be painful at all.

    Unfortunately, when the Gov't creates massive deficits simply to lower taxes, rather than, say, investing in necessary infrastructure, then the repayment is of the painful variety. So, my problem with Bush's economic policy is that the money has to be repaid sometime......if not right away, then over the next decade, say. Bush's lucky successor (McCain?) gets to deal with it. Meanwhile, back in the present, Bush gets to be a hero because the economy is fine for now.

    I realize I'm oversimplifying a complex subject, but I think you get my point.

    NoComps

 
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