Spending the way out of a recession.

Valmont

Where does this saying come from? I know I could google around to find out but I find a boards.ie discussion to be more interesting and informative in the long run.

I was talking to a friend studying international relations on the continent and he is adamant that this is how things have been done for the last 100 years. Acknowledging my leaving certificate level economics, I wonder what if there is no money to spend and what if we were to print more money, would inflation then become a problem? Specifically though, I'm wondering about that saying and what the consensus is regarding it. Cheers.

ei.sdraob

Comes from here

Yes you are right when nothing was put aside during good times (as Keynes insisted on), then printing presses are switched on leading to more problems down the road, the UK in last few years is a good example of this

noodler

Not an option for Ireland obviously but we do (had) access to huge amounts of capital from the Eurozone.

Such funding could have been used for all range of useful purposes - we used it for overhousing.

nesf

Valmont wrote: »

I wonder what if there is no money to spend and what if we were to print more money, would inflation then become a problem? Specifically though, I'm wondering about that saying and what the consensus is regarding it. Cheers.

The other option is to borrow it from the global financial markets, which we are doing at the moment just to try and balance the budget, otherwise we'd have to make extremely drastic cuts to expenditure (i.e. start closing down hospitals on a wide scale etc).

Slouch

Here's Stiglitz defending deficit spending if that helps.

http://www.project-syndicate.org/commentary/stiglitz123/English

If you ever read Krugman's occasional article in the Irish times, he'll more than likely be going on about the same thing. James Galbraith in particular is a pretty hardline defender of deficit spending (runs in the family).

Hasschu

Deficit spending is not the problem by itself, if it is done for productive purposes it is good, if it is done in typical Irish political fashion it is bad. Most spending by Irish gov'ts is bad because it is short sighted and rife with nepotism, cronyism, fraud and corruption. Even projects that on the surface appear to be beneficial are flawed. The truck tunnel to the Dublin docks is a good example. No thought to moving the docks up or down the coast, Boston has the Big Dig so lets duplicate it. A learned English woman told me once that there is evidence of widespread mind altering substance use in Irish Mythology. I wonder if the present gene pool is not now showing the results of permanent mind alteration and not for the better.