[Skip to the end]

Falling consumption and rising unemployment means the private sector wants to work and get paid, but doesn’t want to spend its earnings on consumer goods.

No problem!

Depending on one’s politics, this allows government to increase spending to employ the idle resources for public purpose, such as infrastructure, etc.

Or alternatively, to cut taxes until consumption resumes. Or some combo of both.

The government spending is not financially constrained. The applicable constraint is the quantity of real resources offered for sale.


[top]

Leave a Reply