Forums → WEPR → predict what will happen to our country if we keep spending money

Once again - I hate real-life examples.

Exactly why? Theory is nice and neat, but it means absolutely nothing if it's never been tested.

Exactly why? Theory is nice and neat, but it means absolutely nothing if it's never been tested.

Theory means everything - you can never PROVE anything by testing something a finite number of times. All inductive arguments prove nothing, because they only focus on patterns.

If something is true in theory, and doesn't work in practice, it defies the law of non-contradiction, because something cannot be right and wrong at the same time.

I haven't taken macroeconomics, yet, but most countries issue stabilization policies to stabilize inflation and stagnation.

Could you please explain how high taxes stabilizes inflation? Inflation is caused by a devaluing of money. How would high taxes help stabilize it?

Could you please explain how high taxes stabilizes inflation? Inflation is caused by a devaluing of money. How would high taxes help stabilize it?

It would be too much to type to explain it. Just take macroeconomics.

If something is true in theory, and doesn't work in practice, it defies the law of non-contradiction, because something cannot be right and wrong at the same time.

Then every single government and economic model defies that law.

The point of government is to protect the people. Government was never supposed to provide healthcare or restrict what they can buy... They can (or are supposed to) only cause wars and limit drug use or anything else considered 'dangerous', not 'needed'.

So, education should not government funded, healthcare should not be government funded, parks should not be government funded, mail should not be government funded, police should not be government funded, and welfare and censuses should not exist.

So the only thing government should fund, is the army. They can fund it with low taxes (1%) for everyone. Also, people should be allowed to bear arms so that they can have protection from the army because if some radical president comes into power, then he can just take control of the army (as Commander in Chief) and basically form a dictatorship.

That sounds great.

Anyway... We would all die very unhappy deaths. Our children would all murder us. Humanity would fail. The end.

That's exactly what Libertarians want.

So, education should not government funded, healthcare should not be government funded, parks should not be government funded, mail should not be government funded, police should not be government funded, and welfare and censuses should not exist.

Pretty much.

That's exactly what Libertarians want.

That's exactly what Libertarians want.

Your evidence?

spending money is needed to keep the economy running.

Spending money in what way? Do you mean government spending? Or do you mean spending that individuals do? There's a huge difference between the two.

Government spending money - it "stimulates" the economy more if they don't spend the money at all. It's fallacious to look at the amount of money spent, but instead, you have to look at capital.

The value of money is dependent on how people value money, which itself is dependent on the supply of money and the amount of goods buyable with money. Ultimately, the economy itself depends not on the money itself, but on the goods that are produced.

We'll look at 3 scenarios - Government spends the money, Government burns the money, Government taxes less.

Scenario 1 - Government spends the money

If the government spends the money, they must choose where to spend the money. Now, understand how the free market works - by companies competing with one another, there is competition, and the most able company - the one that is the most able to engage in mutually beneficial trades with consumers is the one that will be victorious.

Government spending, however, upsets the mutually beneficial trades between consumer and company by helping one particular company - giving it an unfair advantage over the other companies. Thus, certain companies may be favored that are more inefficient at satisfying the consumer (through mutually beneficial trades) than other companies because of government sponsorship.

Now let's look at scenario 2.

Scenario 2 - Government Burns the Money

It looks awful - the government is burning the money! However, notice that the government is - 1. Decreasing the supply of money, and 2. Not affecting the amount of goods in the country. They are doing nothing but affecting inflation. In fact, they are making everyone else's money worth more!

Obviously, severe deflation, like in the Great Depression can have a negative impact, especially if a person is at a constant income or making constant payments over several years. However, notice that you're not hurting the economy directly - you're only making everyone else's money be worth more.

Scenario 3 - Government taxes less

If the government taxes less, then the government will have a smaller share of capital, meaning that people will have a relatively larger share of capital. Because of this, people will be able to have certain trades that they would not have had otherwise. Through free trade, they will be able to "stimulate" the economy in a more efficient way.

(government hires companies to make roads, build offices, ect. thought about that?)

This is what I was attacking - the government trying to "stimulate" the economy.