This ranks right up there with "contractionary expansion."
Yale professor Robert Shiller, talks about how we can solve our economic problems by raising taxes then spending that revenue.
| "In reality, stimulus can easily take a balanced budget form: The government can simply raise taxes and raise expenditures by the same amount." |
Ummm...isn't that just redistribution of income? Net change is zero?
Okay, maybe it could work by recycling the savings of the wealthy (presumably, they are the ones who'd be taxed) into greater levels of consumption. But call it what it is...income redistribution.
The problem is, no new net financial assets are created and that's what the non-government is desiring to accumulate right now. It's why interest rates are so low and why demand for Treasuries is so high.
Deficit spending facilitated by higher public debt issuance does the same thing only better. It recycles savings into higher consumption AND creates net new financial assets.
