Excerpt: Its a hard concept to wrap your head around, and Krugman keeps trying to explain it. Government spending, rather than government belt-tightening is the way out of recessions. Seems counterintuitive, even irresponsible, spending your way out of a slump, but there you have it. My comment: John Maynard Keynes discovered this economic principle during the Great Depression. FDR provided evidence for it with the success of his New Deal (spending) programs. Even Nazi Germany got itself out of the Depression by building the Autobahn & all of its new military hardware. Government spending creates demand for goods & services in the private marketplace, just when unemployed consumers arent able to buy those things. That gets dead businesses going again. And if the government gives money to consumers, they buy more goods & services, amplifying the boost to businesses. Once out of the recession, revenues come rolling in again and the government can start paying off the money that it borrowed.
Posted on: Sat, 24 Jan 2015 05:58:15 +0000
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