The thing about deficit spending is that you should only be doing it when you need to be doing it. No, this isn’t a rejection of that Keynesian idea or ideal, it’s the point of it.
When wages are flatlining, when the economy needs that bolus of extra demand then, OK, go borrow and spend. Or, in the MMT world, print money and spend. But once you’ve delivered that bolus and the economy has recovered then you must be able to stop that spending – whether delivered by borrowing or printing. That is, a permanent increase in spending is not Keynesian demand management, only a temporary one is.
Tim Worstall, “The Guardian‘s Absurd View Of NHS Funding”, Continental Telegraph, 2018-06-15.
October 1, 2020
QotD: Even so-called “Keynesians” fail to follow Keynes
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