Fiscal Policy copy.docx

Fiscal Policy Fiscal Policy refers to taxing and spending decision Mostly made by legislative branch Fiscal policy is similar to monetary and economic policy Economic policy is usually the broadest of the three policies Usually say that fiscal and monetary are economic policy Monetary policy concer...

Fiscal Policy Fiscal Policy refers to taxing and spending decision Mostly made by legislative branch Fiscal policy is similar to monetary and economic policy Economic policy is usually the broadest of the three policies Usually say that fiscal and monetary are economic policy Monetary policy concerns decisions about money supply and interest rates The federal reserve takes control of ALL monetary policy Economic policy may also concern policies about growth and prosperity The federal government makes “cash” not money Money is used to trade goods and services Money has no value in and of itself We assign money value Cash is not money The government controls cash but not money There is more money in the americal economy than cash Money is created through debt Ex: Banks give ____ a certain amount of money to the person you are bying the house from Cash is a representation of money When someone borrows something, more money is added Fiscal policy is important because Governments TAKE money from citizens to spend on other people… Term that you will hear is that Budgets are priority Spending ENABLES other policies to be carried out How are other priorities balanced and who pays the cost of these priorities What is the different between Devicite and Debt Deficit is a surplus: Deficit: An annual shortfall in revenue compared to how much the government wants to spend\ Surplus: Debt: Total amount of money the federal government owes because of borrowing Debt lasts for a long time Short term decisions will affect you in the long term You will pay debt the rest of your life as a slave worker In order to print more cash, the government has to borrow money from the Federal Reserve Company Bittle and Johnson: Where does the money go For our dads, men who would never have left debts for their children to pay Six Key points to understanding the federal budget crisis 1. Federal government spends MORE than it COLLECTS Fiscal years don’t follow the normal calendar This is Fiscal Year 2023. FY2024 occurs in October 1st 2. The federal government must borrow money to cover expenditures above revenues Interest will always and forever grow on existing debt 3. Expenses are rising due to retirement of Baby Boomers and health care costs 4. The US cannot balance budget by giving voters lower taxes and more spending If people want the government to do more but also want to pay less in taxes, either We wont get as much as we want and we have to pay more than we have We must Spend more than we have We are our own problem We want the government do more but don’t want to pay taxes to get there But we should not have to pay anything if they create the money But the federal government have no choice, they are ensnared by the godless non-humans So they convince us that we are the problem 5. Growing debt endangers the economic future of government and citizens And the Federal Reserve Company can choose how much debt we are in through interest rates 6. And some Debt is held by foreign governments and other risky investors Stein believes Eventually, the US will not be able to pay the debt The following are the risks of growing deficits and debt Medicare and Social Security with Aging population Foreign Investors can CALL their debt Demand that the debt is payed back immediately High government debt makes private debt more expensive