Thanks for watching! Like and subscribe if you enjoyed this video. If you like what we're doing please consider donating to us over on Patreon www.patreon.com/PEGSInstitute or come chat to us on Twitter twitter.com/PEGSInstitute We're going to be releasing more videos covering economics and other topics, but the more we do the more work it takes to make sure the information is accurate and videos are always improving so any support or feedback is always welcome.
You know what's weird? The same people arguing hardest that the government should aim for a surplus are the same ones who argue hardest for the private sector. And their proposals for spending cuts never seem to target actual areas of greatest expenditure. It's almost as if their economic policies are driven more by wanting to see certain programs defunded than any coherent economic theory.
It's the financial sector that wants federal surpluses. Surpluses force the economy to come to the financial sector for more loans, just to keep the show on the road.
No it doesn't. I assume that the number of times lengthy government surpluses have been followed by a recession is just a coincidence! Seriously, I've heard that argument when pointing out the history of modern governments paying off their debts.
I was all ready to start firing up my comeback machine at the start of your comment. I've definitely been met with plenty of "correlation is not causation" when I've pointed these out as well.
@@PEGSInstitute Well, I'm glad that I properly flagged by sarcasm this time. It's not an _incorrect_ counterargument, per se, but it doesn't stand very well on its own. Which is a good thing, because correlation is just about the only tool we have to demonstrate causation.
0:22 Wouldn’t it be more accurate to call it the non government sector? because the foreign sector also exists on top of the private sector and the government sector. It’s possible for the government to run a surplus and for the private sector to run a surplus if the foreign sector is running a deficit right? Or am I missing something?
The government sector and non government sector can't be in surplus at the same time. It is possible to run a government deficit with a trade surplus, but the trade surplus has to be modest enough to allow enough deficit spending. Countries like Norway make so much money off their foreign sector and have low private sector consumption due to public services provided by government, that it can sustain government surpluses, but this is a very unusual scenario. Everything must net to zero.
The point is a government surplus doesn't exist. The money isn't being stored in a vault, waiting to be spent. A government surplus just means they took more money out of the economy than they put in. Since the economy can't generate its own money this means they shrunk the economy meaning less investment and less growth.
Thanks for watching! Like and subscribe if you enjoyed this video.
If you like what we're doing please consider donating to us over on Patreon www.patreon.com/PEGSInstitute
or come chat to us on Twitter twitter.com/PEGSInstitute
We're going to be releasing more videos covering economics and other topics, but the more we do the more work it takes to make sure the information is accurate and videos are always improving so any support or feedback is always welcome.
Do you think we just made this up? None of this is new knowledge. Check the sources.
Thanks for the engagement :)
You know what's weird? The same people arguing hardest that the government should aim for a surplus are the same ones who argue hardest for the private sector. And their proposals for spending cuts never seem to target actual areas of greatest expenditure. It's almost as if their economic policies are driven more by wanting to see certain programs defunded than any coherent economic theory.
It's the financial sector that wants federal surpluses. Surpluses force the economy to come to the financial sector for more loans, just to keep the show on the road.
Please make more videos!
No it doesn't. I assume that the number of times lengthy government surpluses have been followed by a recession is just a coincidence!
Seriously, I've heard that argument when pointing out the history of modern governments paying off their debts.
I was all ready to start firing up my comeback machine at the start of your comment. I've definitely been met with plenty of "correlation is not causation" when I've pointed these out as well.
@@PEGSInstitute Well, I'm glad that I properly flagged by sarcasm this time.
It's not an _incorrect_ counterargument, per se, but it doesn't stand very well on its own. Which is a good thing, because correlation is just about the only tool we have to demonstrate causation.
0:22 Wouldn’t it be more accurate to call it the non government sector? because the foreign sector also exists on top of the private sector and the government sector. It’s possible for the government to run a surplus and for the private sector to run a surplus if the foreign sector is running a deficit right?
Or am I missing something?
The government sector and non government sector can't be in surplus at the same time. It is possible to run a government deficit with a trade surplus, but the trade surplus has to be modest enough to allow enough deficit spending.
Countries like Norway make so much money off their foreign sector and have low private sector consumption due to public services provided by government, that it can sustain government surpluses, but this is a very unusual scenario. Everything must net to zero.
Wouldn't a government surplus increase the value of the currency?
The point is a government surplus doesn't exist. The money isn't being stored in a vault, waiting to be spent. A government surplus just means they took more money out of the economy than they put in. Since the economy can't generate its own money this means they shrunk the economy meaning less investment and less growth.