You Can’t Spend Your Way Out of Debt
Who would have guessed?
Alarmingly this simple fact still seems to be escaping the current US administration.
Kelsey Grammer is absolutely right. The ‘stimulus’ package is about rewarding people who are unproductive, or who have been irresponsible, by taking money from people who are productive and responsible.
This has two effects.
First it discourages responsibility. Why should states, corporations or individuals bother to save money, spend wisely and live within their means, if when they do so money is taken from them to give to states, corporations and individuals who have not?
Secondly, taking money from those who are productive, who are generating wealth, investment and employment, means that investment and employment will be reduced. And this in turn means the recession will be deepened and prolonged. And this means that the people who are most in need will suffer more and longer.
You can’t spend your way out of debt. Even when it is other people’s money you are spending.