Micoeconomics vs. Macroeconomics
This is going to be a short class on the difference between Microeconomics and Macroeconomics.
First, what are they? Microeconomics, Micro meaning small, has to do with the economics of an individual or small business. Macroeconomics, Marco meaning big, has to do with the economics of large companies and governments.
This is written by an American about the US. Most people think that balancing the budget should be easy. People do it every day in their check-book. Well, for the US Government it's not as easy. Does anyone remember how we got out of the depression? by the US spending money. Doesn't seem right to you? Make money be spending it? Well for the US and other governments that's the way it is done. Here's how it works.
The government spends money of projects. That money they spend goes to buy supplies and man power. The company that supplies the project and the people that work for it make money. They pay taxes on it. The government gets a certain percent of that money back already. But then the company pays their workers with that money. They pay taxes on that. All the workers go home and buy groceries. The owner of the company buys a bew boat. They all pay taxes on that. The grociery store and boat shop pays their employies. They spend that money. They pay taxes. ect. ect. Point is is that the government gets it's money back while at the same time families get feed, extra taxes are paid to local and state governments, social security gets feed. and the community gets the benifet of whatever the project was.
Here comes the balencing part. All the above needs time to take place. It's a matter of spending money when the economy is down and saving when it's up. Problem is is that it takes 6 months to tell where the economy was 6 months ago. That makes it hard to know when to spend. Also politics comes into play. People see that the economy is up and they want their congress people to spend money so they do. But they do it in a time where they should be saving money. Then the economy goes down and and we have to spend money to get out of it. It's a vicious loop that is hard to break.
In all honesty though, the US is not really in debt. We just have a debt. What's the difference? Well it would be like Bill Gates owing me 5 bucks. It's a debt that he has but it doesn't put him "in" debt. The US could sell the Grand Canyon to Japan for 10 times our national debt.
One more point to make on this. People were mad at the president for spending $500 on a haircut. I bet the barber didn't mind. The guy that sold grocieries to the barber probably didn't mind also. They all paid taxes on that $500 and paid into social security and the local government. Maybe we didn't seem any money directly but it never left the country. I think most people are just jelous that they can not afford a $500 haircut.
