Does Government Spending and Money Expansion Create New Wealth or Destroy It?
2024-01-19
Many economists claim that economic growth is driven by increases in the total demand for goods and services, additionally claiming that overall output increases by a multiple of the increase in expenditures by government, consumers, and businesses. Thus, it is not surprising that most economic commentators believe that a fiscal and monetary stimulus will strengthen total demand, preventing the US economy from falling into a recession.
These economists believe that increasing government spending and central bank monetary pumping will increase production of goods and services and strengthen total demand. This means that demand creates supply. However, is this the case?
Why Supply Precedes Demand
In the market economy, producers do not produce solely for their own consumption. Some of their
Mises Circle in Fort Myers
2024-01-17
Save the date!
Join the Mises Institute for a special Circle in Fort Myers, FL this November.
Registration, speaker details, and agenda forthcoming.
Can Classical Economics Explain the Approaching Fiscal Disaster?
2024-01-16
Today’s US fiscal predicament includes unprecedentedly high federal spending financed by inadequate tax revenue and high federal budget deficits. There is a lack of sufficient buyers of US Treasury debt. Rating agencies have recently downgraded the US debt, and entitlement benefits are forecast to outstrip their trust funds in a few years. How might a nineteenth-century English economist be relevant to this predicament?
Might this fiscal predicament be resolved naturally by rational consumers following their own instincts, thus precluding mandated top-down austerity or other harsh measures? Does our constitutional structure allow sufficient legislative and executive branch compromise to improve our fiscal trajectory? Or perhaps the only resolution is a bipartisan fiscal commission to