[quote=Hobie]Sure it does. It depends on where the money to spend originates. Private or public sector.
Keyes believes govt spending, ‘primes the pump’ by increasing the money supply. When it doesn’t work that is when hyper inflation begins. As Livincali cites.
If the same spending is by the private sector ie. banks lending or spending savings then you are correct with respect to inflation.
The bigger picture is not so much the academic definitions but it the general ‘mood’ of the country. If folks and business feel confident and secure they spend and take risks. When there is doubt, as there is now, people hang on to their money and business hunkers down until they feel the tide has turned.[/quote]
You’re closer to correct, but that’s not what I was responding to. He said spending to get out of debt. Keynes suggested just the opposite. There’s a big difference between getting out of debt and getting out of a recession. Keynesian ecomomics would lead to cutting spending, increasing taxes and deleveraging in times of economic growth.
