Comment by usefulcat

A completely balanced budget would probably result in deflation. In the U.S., there are only two ways that I know of that money is created: 1) A bank making a loan and 2) the federal government spending money. Likewise, there are two ways that money is destroyed: loan repayments and taxes. But in the case of loan repayments, the total amount paid/destroyed is always greater than the initial loan due to interest. The extra money for the interest has to come from somewhere. And this is without even considering the effects of increases in GDP.