[quote=livinincali]
All government deficit spending is stimulus. It has to be by definition because government borrowing and spending creates a demand that wouldn’t otherwise be there. Are you arguing that only some government deficit spending is stimulus?
As for the first point we’ve been trying the Keynesian stimulus spending solution for decades and every time debt grows faster than GDP. It successfully kicked the can down the road but makes the future problem bigger and bigger. I suggest we try the solution that was used in the 1920-1921 depression. Cut spending, let the bad debt fail, prosecute those criminally responsible, and rebuild the system. Yes, there will be significantly bad short term consequences for all the actors in the economy (and we’ll realize that many entitlement promises can’t be kept) but it’s far better to do it under you own terms than letting market forces dictate.
The economy had one of it’s best growth periods ever after the 1920-1921 depression.[/quote]
If all deficit spending is stimulative, then all government spending must be stimulative. If you have a $100 deficit, you can’t identify which $100 suddenly is stimulative. But the response is no, all deficit spending is NOT stimulative. Only increased spending is stimulative. And only required under Keynsian theory if private spending has dropped.
Arguing that we’ve tried it before and it hasn’t worked is simply not true. Stimulative spending does work. What has not happened is cutting spending and raising taxs in good times. (See tax cuts, increased spending from 2002 to 2007.) You can suggest cutting spending all you want. It can’t be stimulative. It won’t work.
