{"id":904,"date":"2013-04-08T19:36:00","date_gmt":"2013-04-09T00:36:00","guid":{"rendered":"http:\/\/www.nathanhunstad.com\/blog\/?p=904"},"modified":"2013-04-08T19:40:06","modified_gmt":"2013-04-09T00:40:06","slug":"budgeting-for-families-and-superpowers","status":"publish","type":"post","link":"https:\/\/www.nathanhunstad.com\/blog\/2013\/04\/budgeting-for-families-and-superpowers\/","title":{"rendered":"Budgeting for families and superpowers"},"content":{"rendered":"

Wonkblog has a good piece<\/a> about all the reasons that people hate budget deficits, and all of the reasons why they are incorrect. It\u2019s a great piece, but it does overlook one of my favorite reasons trotted out by politicians as to why we need to balance the budget: \u201cFamilies have to balance their budget, so does the government!\u201d But do they? No.<\/p>\n

<\/p>\n

Obviously, families are not countries. But in what ways are they different? One obvious explanation for why families can\u2019t perpetually run deficits is that people don\u2019t live forever: if I spend more than I make year after year, piling on more and more debt, eventually I\u2019ll want to retire, or I\u2019ll be fired, or some other event will cause lenders to dry up my credit and the bill will come due. Countries, though, don\u2019t have lifespans, don\u2019t face mandatory retirement, and are otherwise untroubled by the harsh realities of mortality. As long as lenders are around, they can accumulate debt.<\/p>\n

\u201cBut wait!\u201d one might say. \u201cThat\u2019s just debt piling on for our children and grandchildren!\u201d Is it, though? Imagine I came up short $100 every month, but every month, somebody offered to loan me that $100 with the stipulation that I pay $99 back at some point in the future. I could do that pretty much forever. Unrealistic? Not at all: the U.S.\u2019s real interest rates are negative<\/a> at the moment. People are paying us for the privilege of lending the government money. True, this won\u2019t last forever, but even if interest rates turn positive, as long as income grows faster than interest, we\u2019ll come out ahead. I can pay $102 to borrow $100 now, but if I\u2019m making $103 in a year, I\u2019m still winning.<\/p>\n

Okay, so what about cautionary tales like Greece? It\u2019s fine to borrow when interest rates are low, but what if they spike to 7, 10, 15%? That\u2019s incredibly unlikely, since unlike Greece, we control our own currency. We can print more if we want to. And while going crazy with the printing presses isn\u2019t a good idea, moderate inflation can be. This is precisely the reason why the gold standard is such a poor idea: when you can\u2019t control your currency, you have wild swings<\/a>. When you can control it, you can balance things out. Arguing that the gold standard is better than fiat currency because bad things can happen with fiat money is like arguing people shouldn\u2019t have guns because they can do bad thing with them, which is an argument most goldbugs would have a bit of a problem with.<\/p>\n

When you get down to it, deficit scolds are arguing from a point of morality, not of empiricism: Easy money and debt are sinful, as Paul Krugman puts it<\/a>. And while it may make yourself feel good to argue morality when it comes to budgeting, we need to be reminded time and gain that economics is not a morality play. What matters is what works, not what feels right or wrong.<\/p>\n","protected":false},"excerpt":{"rendered":"

Wonkblog has a good piece about all the reasons that people hate budget deficits, and all of the reasons why they are incorrect. It\u2019s a great piece, but it does overlook one of my favorite reasons trotted out by politicians as to why we need to balance the budget: \u201cFamilies have to balance their budget,… Continue reading Budgeting for families and superpowers<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4],"tags":[66],"class_list":["post-904","post","type-post","status-publish","format-standard","hentry","category-politics","tag-budget","entry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/904","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/comments?post=904"}],"version-history":[{"count":1,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/904\/revisions"}],"predecessor-version":[{"id":905,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/posts\/904\/revisions\/905"}],"wp:attachment":[{"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/media?parent=904"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/categories?post=904"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nathanhunstad.com\/blog\/wp-json\/wp\/v2\/tags?post=904"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}