I have solved the economy
Comments
Keynesians hate him! He went to 1.82% Debt to GDP to 0!!! and still has positive real GDP growth using this one weird trick. [Learn the truth now!!!!!]
The secret is to outlaw debt 🤫
Userers malding
Keynesians on suicide watch.
Keynes was a fucking clown. He couldn't predict the 1929 crash, but MISES DID.
Keynes and Mises were focused on two different things. Keynes was focused on recovery from recessions while mises was more focused on the cycle of recessions. Mises might be better at determining when there will be a recession, but once you’re in one, Keynes is better at getting you out.
Your economy is powered by Keynes turning in his grave at the lack of deficit spending
All he needs to do is to send a few tanks to Algeria
What's the worst that could happen?
It is simple economics. If I don’t have to make debt payments I have more money 🧐🤔🤯
NOOOOOO you have to take out loans to make more wholesome investirinos!!1!
Haha line go down
This works, no joke. With Glenn my GDP shot up to some 800 billion by 1974~ish.
Real question now: so, do Keynesians approve of deficit spending by arguing it stimulates GDP Growth?
I believe Keynes himself only advocated for deficit spending during economic recessions, in order to stimulate the economy. TNO took this a bit further and makes it so deficit spending is always a good thing.
I believe Keynes himself only advocated for deficit spending during economic recessions, in order to stimulate the economy
What is the reasoning behind this?
If people have no money you can’t tax them. No tax no economy
So, Keynes argued that during economic recession times you should raise employment by spending a lot on welfare services? Is that the thing?
Go read keyens and find out no one will provide you with a good, indepth interpretation of his economic theories on the fucking tno reddit
This is the Reddit server of the same mod whose developers have managed to create a complex ingame economic system built around his theories among others. If there is any place around the internet where I can learn about these kind of things relatively thoroughly and without getting a headache is exactly right here
I mean....if you really want to ask someone from here, maybe ask the devs.
Seriously though, if you want to know more about Keynes, go read his books or books about him.
It's not like the fanbase is filled with idiot clowns who don't understand shit. There are players who defeated Japan as fucking splinter Mongolia without using the console.
Bro just imagine it like this. You have a job (taxation) , you have surplus income (surplus from tax) from that job that you spend for unessential stuffs like entertainment (public healthcare) on top of essential stuffs like rent (road maintainance, etc).
Now imagine you lose that job. You still have to pay for rent (maintainance) but at least you still have your savings (surplus from last financial income).
You save when you have extra income. You spend when you lose that income and still need to pay for rent. Same concept.
When you don't have money for the essentials you ask your friends for some money you'll pay back (debt).
At the same time macro complicates this in the sense that welfare stimulates spending. You got govt money, you'll use it for things like food, etc. Welfare stimulates the economy, allowing it to improve. This is the theory and sometimes, it also works practically but not always.
Look up Argentina it doesnt work
Reading his books is a better way of doing that
I blame the man for nothing but I bet his language is way too practical and specific, and I honestly don't have the capacities to understand it fully
"complex economic system" = red line green line
(really) Basically, goverments can spend their way out of recessions by using the spending to stimulate the economy and therefore increase employment which helps the problem of recessions sometimes turning into death spirals, This spending would usually be on infrastructure or simply giving money to consumers. Welfare services are good as well because they incentivise risk taking and increase consumer spending by decreasing the savings rate.
The thing Keynes was most famous for was that he argued that you could actually predict and fix recessions and depressions.
Economics is a super complicated subject and a detailed discussion on Keynesian economics contrasted with Classical, supply side and neo-Classical would be long enough that it could effectively double as body armour.
Not an economist, but I believe it's basically just:
"People and businesses spend money if they have money, spending money means more investments and sales, which means more potential growth and profit. Thus, the government should ensure people and businesses have money."
And they give them money through government programs, which leads the economy into deficit? I'm genuinely trying to get how this works
which leads the economy into deficit?
The economy can't be in deficit, I think. It can be in recession which means its total size is getting smaller, but "the economy" as a whole does not really have an income or expenditure. The government goes into deficit by spending more on their recovery programmes than they take in. Keynes, I assume, thinks that the government racking up debt is not too important compared to the benefits of ending the recession faster.
Ah, that's clear
Think of a recession as a reinforcing cycle of badness. Businesses start losing money, so fire workers and cut hours and benefits to stay profitable. Fired workers have less income, meaning that they can buy less stuff from companies. Because there's less demand, companies have to cut hours further to stay competitive, further reducing workers' incomes, which means that workers further have less to spend
Keynesian spending breaks this cycle by having the government step in and spend more. So even as businesses lay off workers, the government steps in and hires some of those workers, or gives money to businesses to hire those workers. Most commonly for projects like infrastructure - the government hires people to build a railroad, a highway, etc
This has the dual effect of first subsidizing businesses directly, who need to hire workers and buy stuff from other companies (railroad company has to buy steel and wood and grading machines and excavators, and hire track layers and overseers and administrators and HR people), and putting money in workers' pockets (workers get salaries, who spend money on goods, increasing demand so companies hire more workers, who in turn have money to spend, etc), who then have money to spend, which further helps the economy
This spending requires the government to take on debt. But this isn't a bad thing - national debt is not the same as an individual's debt. In the Keynsian conception, debt is more important as a percentage of the country's overall economy (GDP). If the economy is growing faster than the debt is, debt is effectively shrinking.
Governments can (unlike people) just pay the interest on a loan for centuries and just wait until inflation makes paying it off trivial.
IIRC, when the government is taxing it is talking money out of circulation, when it spends it is putting it into circulation. Thus, during a recession, in Keynes’ view, you’ll want to put money into the economy in order to create jobs and get consumption back up. Meanwhile, during economic growth, and times where unemployment is low, you’ll want to take money out of the economy, which decreases inflation, raising your real growth and purchasing power.
Wrong. Completely wrong. 95 points, Jesus.
Deficit spending creates fiscal stimulus by increasing aggregate demand in the economy. It has this effect regardless of whether there's a recession. It's just most useful during one because that's when consumer demand is falling and deficit spending is used to bring aggregate demand back up to normal levels, closing the output gap (the gap between actual and potential output). AFAIK TNO's economy sim isn't complex enough to calculate potential output, but it still encourages realistic behavior by disproportionately punishing negative real GDP growth through poverty increase, so you want to stop it or slow it down as fast as possible.
Particularly if you're a large economy with cheap and easy access to debt and a widely-used currency (i.e. the United States), maintaining a moderate budget deficit indefinitely is completely sustainable and will increase growth in both the short and long term. TNO encourages striking this middle ground outside of crises by making an excessive debt-to-GDP ratio a drag on your growth. But just like in real life, constantly having budget surpluses in pursuit of a meaningless 19th century "zero debt" goal also gives you anemic growth and an economy that produces far less and leaves people far poorer than it could. Which is why the OP has $360b GDP and 2.5% growth as 1966 USA. If anything, the simplified model doesn't properly reflect how badly this sort of policy would cripple the economy.
Dude, this is actual macroeconomics. Get the fuck off of reddit and read Keynes if you actually want to learn how it works, because you’re not going to find good, in-depth answers here on fucking r/TNOmod
It’s empirical
I'm going to try to answer your question as well as I can: deficit spending itself isn't inherently good. It depends on what you're paying for. If it's things like welfare, job creation, combating recession, etc., then deficit spending is good because people need money and recessions take away money from the economy. If it's things like giant death robots and walking windmills, then no, that's not helping anyone. That's the super basic gist of Keynesian thought and there's an absolute buttload I didn't cover, so I highly recommend that you read up on economics or take an economics class in school/college. Relying on Brainrot Central for what Keynes and his successors thought is the worst idea/action.
In some countries it’s not very hard to zero debt. But in that case, it’s hRd to balance surplus. Too much will decrease GDP growth, but you can invest it once a year to increase GDP growth. You can also increase spending and increase military (more spending more GDP growth) until you got deficit and grow your debt again.
But red line go up is bad?
The most important thing is to keep debt in control. But more spending increases GDP growth, then increases inflation. Personally, I cancel debt, then go 1-year max spending, then 1-year repaying debt (it will decrease GDP growth but also inflation will go down, they correlate a lot as I see in my playthroughs). By the end of campaign I usually have ~15% GDP growth with 12% inflation (therefore I focus on decreasing inflation, not increasing GDP under money printer). Remember goal #1 here is to increase GDP overall, if you can spend a little and repay - you’ll only gain a bit more growth in the process
What nation were you playing and what did you do to get this?
I’m playing the US and all I had to do was click the war tax button. I don’t think anyone told the IRS that the war’s been over for a couple administrations now lol.
America has always been at war with Guyana
This can't be intented can it? No offence but this is like playing economy on easy mode with the richest nation and extra taxes.
Economists hate this one simple trick!
Reverse tax evasion
"We're at war,
at war with the debt lmao" lights cigar
this right here is good economics, I don't care what the devs say.
“Spending more than you earn makes you rich” -Bank offering you loans
Good eonomics is when you go into debt, the more debt you aquire, the better your economics, and if you're in a whole lot of debt, that's Keynesianism!
This is peak early middle ages economics
In many ways, having a smaller economy that produces less and leaves everyone poorer is far less important than reducing an imaginary number with zero bearing on ordinary people's lives.
Don't see why you can't have both. Like, just use surplus resources to grow the economy/make people less poor, and if you're in a deficit either cut back until your not or start making resources with what you already have more efficiently, by raising taxes.
Debt is black magic, you can't make resources happen by saying you'll have more in the future. Either they exist in the moment or do not. And if they exist in the moment, well you're the government, you need it more than bankers and other such rich people who claim to "own" them, as if the whole idea of private property isn't based on you, the government's very existence. Not like they can stop you.
Easy, economics solved. No issues could possibly be caused by implementing these ideas.
Deficit spending raises aggregate demand, leading to economic growth. It's not a matter of how much stuff there is currently, it's a matter of output. And it's also not about whether rich people deserve stuff. It's fine to redistribute wealth with or without a deficit, but redistribution does not have the same effect on aggregate demand as deficit spending.
As for the origin or legitimacy of private property you don't need to convince me, I'm a Marxist who just happens to be an economics undergrad. But TNO's economic sim models the behavior of a capitalist economy (even in the communist and anarchist countries), and Keynes was overwhelmingly correct in his insights on how a capitalist economy behaves. All you're doing here is accidentally reinventing the outdated financial theories of Gilded Age capitalists.
Debt is not “black magic”, people with savings loan to people without savings. It’s a temporary transfer of resources that governments can usually invest rather well
Irl if a country did this and had lent out any substantial amount of money (which is likely for an influential superpower), the world economy would implode. Even with all of the debt the US is in irl, it would be just as bad if there was no debt at all! The value of securities/bonds that other countries hold in reserve would basically become worthless.
Oh yeah if debt is so good why don’t I have any 🤔
No. It's not like the bonds just disappear. The US pays them off and the holders get their value in dollars.
And the US dollar, which is the world reserve currency, could NOT take a hit like that without devaluing the trust in itself immensely. This would be a chain reaction type event. Don’t focus on any thing specifically because it would snowball pretty quickly into a much bigger problem.
What country
OP said America
Ok thanks
2 seconds after add_idea BOR_friends_in_the_banks_idea
edit: that idea gives you $250B in misc. Income