There is now no political escape from an escalating burden of taxation and borrowing.
The assumption of supply-siders, Keynesians, and Chicago School economists is that the economy can grow its way out of any existing Federal debt. It can grow its way out of all future debt presently scheduled. There is no threat to the economy by increased Federal debt.
They are wrong. There is a major threat: the other phenomenon they all deny.
CROWDING OUT
Austrian School economists have long argued that the principle, “you can’t get something for nothing,” applies to capital markets. If the government absorbs a trillion dollars of investors’ money, that money cannot go to the private sector.
The Establishment economists look at past interest rates and conclude that government does not crowd out private investing. Interest rates do not always rise when government borrowing increases.
They substitute statistics for logic. They refuse to accept the principle that money lent to the government cannot simultaneously be lent to the private sector.
No comments:
Post a Comment