E.4.5 Define budget debt and budget deficit and distinguish between the two. Explain the effects of both on the economy. (E)
GE.7.4 Explain how the use of fiscal policy affects budget deficits or surpluses and the national debt.
A
B
C
D
F
G
H
I
L
M
N
O
P
R
T
U
V
W
X
Z
Contains
A
Debt solution: debt cancellation is done to preserve the social order, but also to transform it. Most revolutions involve debt cancellation. e.g. after ____ ____ II, German debt was cancelled, in order to avoid a third global conflict.
Contains
B
When the financial sector goes bankrupt, & the government rescues them (guaranteeing all losses), they are transferring ____ debt onto government's books, turning it into ____ debt.
Starts with
C
Having a government that can create money is a good thing, because sometimes society needs more money when it is in a ____ , such as WW II or the great depression. Private banks only create money to profit themselves.
Contains
D
Debt solution: 1 solution is to ____ ____ , which can be used to hold off social unrest, as it did in Kuwait & Bahrain during the Arab Spring. e.g. if the citizens are unhappy, you [same] in order to make them happy again.
Contains
F
Debt History: With the dollar off the gold standard, & oil prices rising, global economic growth stopped. ____ skyrocketed, turning investors & savers into poor people, since their money lost its value.
Starts with
G
Every country has debt, but the amount of debt means nothing until it's contrasted with the country's ____ ____ product, or the total wealth earned in 1 year. When debt is more than half of GDP, that is a problem.
Starts with
H
Debt Problems: when debt gets too high, a citizen's taxes are used to pay for the interest on the debt, instead of being used to pay for schools & ____ , or any other government program.
Contains
I
When the financial sector goes bankrupt, & the government rescues them (turning private debt into private debt), they do this because those banks are us, they are the bank accounts of ____ of ____ .
Contains
L
Debit History: U.S. debt began to grow in the 70s, after Nixon ended the convertibility of the ____ into gold. This is the end of the Gold Standard, when $35 could be added to the economy only if we had an ounce of gold to back it.
Contains
M
Debt solution: 1 drawback to taxing large fortunes (in order to help the poor pay back debt) is that rich taxpayers will just hit a button to send their ____ portfolio to another country: Switzerland, Austria, Luxembourg. This is tax evasion.
Contains
N
When the government ____ the financial system between 1945 & 1971, there was not a single financial crisis in the world. Then bankers lobbied in 1971, said the market would monitor them, so the government removed regulations, & the crises started.
Contains
O
Debt Solution: allegedly, before the U.S. repays their debt, they bring the ____ ____ . If you loaned them 100, you get back 50. You get back the same amount, but the dollars have lost half their value. This is done with inflation, printing money.
Contains
P
Debt History: Since banks were deregulated in the 1980s (governments stopped monitoring them), the U.S. government became ____ on the financial markets, which were a major part of the economic system.
Contains
R
Debt History: After the dollar was removed from the Gold Standard, Arab countries stopped selling petroleum to the U.S., for supporting Israel. Barrel prices tripled & the U.S. experienced an ____ ____ . The shortage drove up prices.
Contains
T
Debt Solution: Printing money & creating inflation is 1 way to resolve debt, but countries in the eurozone have abandoned the right to ____ ____ , since the Euro is a single currency.
Contains
U
Debt solution: Large ____ profit from the debt economy, because interest accrues to those that loan, those who have. So 1 solution is a tax on those who profited from indebtedness, take from the rich, give to the poor, the poor pay back the rich.
Contains
V
The ____ used to handle money creation, & money used to be a public good, like water & air. We need it to live. But now most money is created by private for-profit banks, a private good.
Contains
W
Governments gets caught in the spiral when their debt gets to a certain amount. In order to pay back their debt & accrued interest, they must ____ more money every year.
Contains
X
When banks loan money to businesses, there is risk, because consumers may not spend money at the business. But when banks loan money to the government, there is no risk, because the government collects money from ____ , not from consumers.
Contains
Z
Debt History: nations started borrowing internationally in the 80s, the age of neoliberalism. This decade is known for reducing taxation & ____ government programs; this last part means deregulation, where the government stops monitoring the process.
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