It's Time To Prepare For Trump's Assault On Social Security

[orwell]

8. What nobody seems to realize is...

...all of this "deficit" spending is demand that fuels the economy.

If you eliminate 2 trillion of government spending, no matter where it comes from, you are effectively removing 2 trillion in immediate demand, but also the effect on the money velocity - the number of transactions/investments that flow from that immediate demand.

To put it simply, you drastically contract the economy.

This is a really stupid idea, from many angles.

If you truly want to contract government spending, you must do it in a way that replaces that government demand with private sector demand and investment. This is something that would take many years if not decades to achieve without fairly drastic economic contraction.

The dollar futures are currently trading around 108. That is pretty strong evidence that the rest of the world sees our "deficit" as no big deal. If we believe in the markets, which we claim to, this is all a political circle jerk, with no basis in economic reality.