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Why does deficit spending not work for helping the economy?

Why does deficit spending not work for helping the economy?

Postby hyun-su » Fri Dec 16, 2011 2:15 pm

i have to make a speech on why Keynesian economics doesnt work. Keynesian advocates how govt. should always bail out the economy by spending lots of money if its not doing as well as it should be.

how can i disprove Keynesian economics and what are some reasons for why it doesn't work??

I was thinking of attacking the massive debt keynesians creates with the deficit spending and the effect the debt might have on the economy or maybe how govt. spending might not make up for real consumer spending. are any of these even right?
hyun-su
 
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Why does deficit spending not work for helping the economy?

Postby bocley » Fri Dec 16, 2011 2:20 pm

In a free-market economy, each individual chooses the products or services which best meet his needs. He then buys those needs that will allow him to continue to provide the products and services he is best able to provide to other consumers. Any money he has left over is put in the bank, and others borrow that money to help them to provide goods and services through businesses. The entire system is based on merit. In Keynesian economics, the government manipulates the supply of money by taxing and spending. This takes money out of the merit-driven free market and puts it into the hands of politicians. While the money might have been kept by the individuals who earned the money to meet their needs, it will now go to enrich lobbyists/contractors who support specific politicians.
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