Monday, May 2, 2016

Economics 101 – Budget Deficit

It's generally admitted that a 3% deficit is acceptable and this rather dogmatic view is based on a hypothetical 3% inflation rate. Instead, the goal should be a balanced budget, period.

Better yet, if the country is indebted, its goal should be to create a surplus that would be used as a reserve for repaying the debt.

This said, if we look at the list illustrating this blog, the countries that understand responsible accounting (Norway, Germany, Switzerland) or are oil rich (Qatar) are few and don't surprise anyone.

While the USA isn't doing too badly, it sure could do better and balance its budget, or better yet, create a surplus to begin repaying its humongous debt.

There's no excuse for government to lose money (creating deficit) and in the case of France, it would be totally possible to make huge cuts in its unproductive bureaucracy or overly generous social benefit system.

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