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Jan 24

Channeling Jim Anchower

Yo, what’s up? It’s been a while since I wrapped atcha.

This caught my eye – the chairman of the GMU economics department discusses the questionable benefits of stimulus packages.

In general, I think he’s right – if you take money from X and give it to Y, it doesn’t mean that there is more money sloshing around. Even if you borrow money from X to give to Y, the situation is the same.

However, what if you borrow money from X, who is not an American. Especially if X is a foreign government. In that situation, there’s more money in the US economy than there would be otherwise. (Unless you assume that all of that money would have come through the US anyways).  Foreign Country X may be a little lighter in the wallet, but then they were the ones who decided to buy treasuries at the agreed-upon rate of interest.

And the people who pay back the debt are our future selves, which, if the past is any indication, will be living far richer and more prosperous lives than we are.

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