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Arguing the case against budget surpluses


In regard to arguing against the idea of running central government budget surpluses, the following suggestion was made recently by a reader on Prof Bill Mitchell’s blog-site [1].

If you say something like “a central government budget surplus implies that the private sector is collectively in deficit”, it does sound a little abstract.

Alternatively you could say that government deficit spending is a powerful way in which a central government is able to issue new purchasing power into the economy, and that if a central government budget registers a surplus then purchasing power has been removed from the economy.

The latter does not sound like a very healthy process, does it? This might be a more useful approach.


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