This sounds analogous to violating conservation of mass.
It's not violated. It's conserved in this case because deficits lead to increases in debt as a percentage of GDP, which breaks the system eventually. That's why it has to stop. The system is tapping into money from outside the system.
Government creates no products (eg, crops, shoes, bacon).....except perhaps
license plates, so whatever it injects into the economy is taken by taxation, borrowing, or printing currency. The first 2 items injected
are acquired by removing them from the economy. The last (fiat currency) is taken from us all by lowering the value of dollars we have.
Government doesn't create products but here is what they do:
-They pay for defense. This mean's soldiers' pay, and they can go spend it on houses and products and services and so forth. This also means defense contractor pay, and those employees can go spend it on houses and products and services, etc.
-They pay for medicare and medicaid. This means money that's injected into the health care system, into the salaries of medical professionals that can spend it on houses and products and services. This also means pay for the engineers that make the equipment, and they can spend it on houses, products, services.
-They pay for social security. That's money that people spend on houses, products, and services.
-They pay for domestic programs. Department of Transportation and things like that. They pay federal employees, who can spend money on houses, products, and services. They also pay contractors and makers of heavy equipment, and all of those various employees go spend their money on houses, products, and services.
Ideally this would be balanced: the government would take in taxes and then pay for things that are considered valuable. But since 1980 or so (the year that debt as a percentage of GDP began its upward rise), this has not been the case. Instead, government has been running deficits. Meaning the government is injecting more money than they're taking out. If this were immediately pulled away, the economy would suffer because taxes would go up and government spending would go down. Over $1 trillion per year would no longer be injected into the $15 trillion per year economy.
But the obvious downside of such a system is that debt is accumulating on the federal balance sheet. Debt as a percentage of GDP is rising, and it's not sustainable.
On temporary terms, the government can spend more money than it takes in. But it should be offset by surpluses in other years.
Now, this is not to say that we don't get value by having government performing useful functions (eg, cops, courts, consulates).
But let's not fool ourselves into thinking that money spent is without cost.
I didn't say it was without cost.
I don't think you read my post properly Rev because I was describing the deficit and capital injections in negative terms- things that have to stop at some point.