Quote:
Originally Posted by Slava
I just completely disagree. I think that borrowing to build capital projects and borrowing for operations are completely different. If I borrow money to say build an addition on my house, that's fine. If I borrow money to pay my utility bill though, that's not fine.
And while I'm loathe to use a household budget as a government budget, I think that analogy makes sense here.
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So how I am seeing your point is that if the end result is a tangible asset, then we can borrow to get it. If the asset is a public good service that is intangible we shouldn't be borrowing on it. I don't understand why there is a difference?
If the government builds a school, it pays to hire people who will do the work and then spend the money they earn in the economy growing GDP and increase tax revenue, and increased demand in the market for private goods and services.
If the government hires more nurses, it pays to hire people who will do the work and then spend the money they earn in the economy growing GDP and increase tax revenue, and increased demand in the market for private goods and services.
The difference between the two is you get something tangible (a building) vs intangible (increased public health) but in terms of government stimulus, what is the difference?