ECO/372

Week Four Reflection
Firstly, the National Debt is passed along from generation to generation which makes it harder and harder to buy basic consumer necessities. As a result, we become a "service based" economy with a dwindling middle class to use those services. Taxes would rise, further disenfranchising the poor, causing our jails to overpopulate. Which puts China in a position to dictate and hold a gun to our heads and threaten to pull the trigger on Washington, D.C. Consumer confidence would be severely injured because this is the engine of our economy. Consumers would worry about the future of the economic stability, holding, rather than spending their money. Only when big debts and deficits begin to show hope of declining will the consumers relax and start spending again. I would establish attainable nation fiscal goals that are ambitious and commit to those goals. “By placing caps on all gov't programs, they would be forced to make budget cuts and to not spend needlessly because they will not be able to exceed the allotted cap without a penalty. I would also limit the size of government programs allowing wages to keep pace with the programs spending.” (Riddix, 2014) There's no clear cut decision to be made here, however, very hard decisions need to be made and some commitments also need to be made. Some innovating and unconventional methods should be deployed since doing the same things over and isn't working.

The Richardian equivalence also known as the Barro-Richardo equivalence position is a theory that suggest when a government tries to stimulate demand by increasing debt finance government spending. So demands remain uncharged (Ricardian Equivalence , 2014). They do this to help others save money that way when taxes do increase they have enough money to pay the taxes. This helps out with the economy when times start getting worse. The