ther house in Florida. What do you lose? I have family member that has just went through bankruptcy as far as I can tell nothing has changed in her life.But in terms of diverting saving this is the champion government deficit financing. The deficit is: the deficit is the “difference between what the government spends, and what the government collects in tax revenues”. (Buechner Recording) If the government spends $900 billion, and it collects $800 billion in taxes the deficit is $100 billion the government is spending $900 billion, and only has tax revenues of $800 billion. It’s important to grasp this the government is actually spending $900 billion. The government only got $800 in tax revenues where is it getting that extra $100 billion since is really spending $900 billion. There really only two alternative places the government can get that extra $100 billion. One-way is to print the money. Print the money and spend it. Now if the government does that- that takes goes back to the first thing I discussed under the heading of how to reduce economic growth, and you have the government spending new money on consumer goods. I showed how that reduced economic growth. The other alternative is for the government to sell debt in the financial markets. For government to print up government securities, promises to pay-promising a certain interest return the principal due at a certain date, and sell these to people. These are very eagerly sought in the financial markets. This is a little different from the other three diagrams I have shown. Table 11As you can see I have added in producer goods and services. I have included again these two mutually exclusive alternatives A is the financial intermediaries loan out $100 billion in savings accumulated from all the savers. There are two possible ways these loans can go. They can be loaned for productive purposes to business, or they can be loaned to consumers I have divided this up...
