The private sector cannot survive in negative territory. It cannot go on, year after year, spending more than its income. It is not like the US government. It cannot support rising indebtedness in perpetuity. It is not a currency issuer. Eventually, something will give. And when it does, the private sector will retrench, the economy will contract, and the government's budget will move back into deficit.It's remarkable how Democrats praise Clinton for his handling of the economy. Trouble is, he actually fucked us in the end by giving us mortgage backed securities when there were no treasury bills to buy.
How Clinton Destroyed The Economy
The bottom line is that the signature achievement of the Clinton years (the surplus) turns out to have been a deep negative. For this drag on GDP was being counterbalanced by low household savings, high household debt, and the real revving up of the Fannie and Freddie debt boom that had a major hand in fueling the boom that ultimately led to the downfall of the economy.
And that brings up a broader question that people who advocate balanced budgets must answer.
What's the point of it?Indeed, what is the point? A balanced budget means that growth in the private sector is perfectly stagnant.
Why do we let people like Paul Ryan who know nothing about macroeconomics determine our macroeconomic policies?